Closing Market Report

Star-Bulletin news services

Thursday, November 15, 2001

Stocks mixed following
poor economic outlook

By Amy Baldwin
Associated Press

NEW YORK >> Confident of an economic turnaround in 2002, investors bid blue chips higher today for the third straight session. But a scaled-down outlook for the U.S. economy limited the advance, and profit taking caused a dip in tech stocks.

Today's mixture of modest gains and slim losses was understandable given how Wall Street has been rallying for weeks.

Investors are growing more optimistic that the economy will recover next year and that the United States has been successful in its retaliation in Afghanistan for the Sept. 11 terrorist attacks. But analysts have said the market's upward moves are vulnerable until the turnaround becomes more apparent.

The Dow Jones industrial average closed up 48.78, or 0.5 percent, at 9,872.39, according to preliminary calculations. The Dow has gained 318 points in its three-day advance and is approaching 10,0000, a level that has eluded the blue chip index since Sept. 5, when it closed at 10,033.27.

The broader market was mixed after advancing earlier. The Nasdaq composite index fell 2.60, or 0.1 percent, to 1,900.59, and the Standard & Poor's 500 index rose 1.05, or 0.1 percent, to 1,142.26.

The Russell 2000 index, the barometer of smaller company stocks, fell 3.43, or 0.8 percent, to 449.39. The NYSE composite index rose 0.31 to 579.59. The American Stock Exchange composite index fell 21.88 to 796.72.

Declining issues barely outnumbered advancers 16 to 15 on the New York Stock Exchange, with 1,647 falling, 1,501 rising and 202 unchanged. Volume came to 1.45 billion shares, compared with the 1.43 billion traded yesterday.

The price of the Treasury's 10-year note fell 2 /32 to 101 17/32, while its yield rose 26 basis points to 4.800. The price of the 30-year note fell 3 12/32 to 101 29/32, with its yield rising 22 basis points to 5.245. The price of the 2-year note fell 17/32 to 99 17/32, with its yield rising 29 basis points to 2.998.

Analysts have been expecting investors to curtail their buying or to secure recent profits, particularly when reminded of the weak economy; that was the case today when the International Monetary Fund downgraded its outlook for the U.S. growth.

Updating its economic forecast to reflect the business fallout resulting from the terrorist attacks, the IMF lowered its estimate of U.S. growth in 2002 to just 0.7 percent. That would be the weakest performance since the end of the last recession in 1991.

Just a month ago, the IMF forecast a more respectable 2.2 percent rate.

Still, analysts weren't bothered by the IMF's downgrade.

"They are probably lagging in their process. The market looks ahead, and I think those were thoughts that reflect the past and current situations as opposed to the future," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif.

Moore said the market has risen on indications, such as stronger retail sales, that business is improving. The Commerce Department reported yesterday that October retail sales rose 7.1 percent, the biggest-ever monthly jump and a contrast to the 2.2 percent decline in September's sales.

Wall Street's winners came from a variety of blue-chip sectors Thursday. American Express rose 96 cents to $34.39, McDonald's gained 82 cents to $28.36 and Wal-Mart advanced 72 cents to $56.

Other companies rose on better-than-anticipated earnings results. Retailer Children's Place soared nearly 16 percent, up $4.33 at $32.14, after beating profit expectations by a 6 cents a share.

Analysts said the possibility of lower oil prices was another positive for the economy, and helped the market today. OPEC's most powerful member, Saudi Arabia, said the cartel would let crude prices fall if necessary as a way of pressuring outside producers into cooperating with its plan to cut output.

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