Stocks shake off three
weak economic reports

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By Amy Baldwin
Associated Press

NEW YORK >> Wall Street shook off a trio of disappointing economic reports and forged ahead with its fall rally today, posting a fourth consecutive weekly win for the first time in more than two months.

Analysts attributed the recovery and subsequent rally to buying momentum built up throughout October.

"Investor psychology has changed. The market has become very resilient to bad news. Today is a good example of that," said Michael Murphy, head trader at Wachovia Securities in Baltimore. "Nobody wants to be left behind."

Stocks overcame news that consumer spending and manufacturing activity declined and the unemployment rate increased.

Advancing issues outnumbered decliners 5 to 2 on the New York Stock Exchange. Volume was light.

After falling as much as 87 points in early trading, the Dow Jones industrial average closed up 120.61, or 1.4 percent, at 8,517.64. The Dow had its second-best October with a gain of 10.6 percent last month, just short of the 10.7 percent advance in October 1982. It also was the Dow's best month since January 1987 when the blue chips rose 13.8 percent.

The broader market also recovered, moving into positive territory. The Nasdaq composite index rose 30.95, or 2.3 percent, to 1,360.70, having advanced 13.5 percent in October. The Standard & Poor's 500 index rose 15.20, or 1.7 percent, to 900.96, following its monthly advance of 8.7 percent.

The indexes scored a four-week winning stretch for the first time since the four weeks that ended Aug. 23. For the week, the Dow rose 0.9 percent, the Nasdaq gained 2.2 percent and the S&P advanced 0.4 percent.

The Russell 2000 index, which tracks smaller company stocks, rose 9.95 today, or 2.7 percent, to 383.45.

The price of the Treasury's 10-year note was down 25/32 point today, while its yield rose to 3.99 percent from 3.90 percent yesterday. Two-year Treasury notes were down 1/8 point and yielded 1.74 percent, up from 1.67 percent yesterday.

The market was initially disturbed by news about the economy. The Commerce Department reported that consumers scaled back their spending by 0.4 percent in September, the largest decline in 10 months. That decline is worrisome as consumer spending accounts for two-thirds of the economy.

In a second report, the Tempe, Ariz.-based Institute for Supply Management said that manufacturing activity fell in October for the second straight month. Its index of business activity declined to 48.5 in October compared with 49.5 in September. Analysts had been expecting a reading of 48.9.

And the Labor Department reported that the jobless rate increased to 5.7 percent in October, up from 5.6 percent in September.

Overseas, Japan's Nikkei stock average finished up 0.5 percent. In Europe, France's CAC-40 declined 1.3 percent, Britain's FTSE 100 fell 1.1 percent, and Germany's DAX index gained 0.4 percent.