Closing Market Report

Star-Bulletin news services

Market analysts
say a new bull could
charge in 2003

2002 ends with whimper

By Amy Baldwin
Associated Press

NEW YORK >> Investors depressed by three years of losses on Wall Street might take heart in what some analysts are expecting in 2003: A return of the bull.

With positive reports on earnings and the economy occurring more often, and fewer new instances of corporate scandal, the market's optimists believe stocks will start charging again. But other more cautious analysts warn against unrealistic expectations -- a bull in 2003 will likely be tamer than the one that sent stocks roaring in 1999.

Charles H. Blood Jr. is among the most upbeat about Wall Street's prospects.

"We are now in the first part of the bull market," said the senior markets analyst at Brown Brothers Harriman & Co.

Brinker Capital also expects a robust year on Wall Street. "We think double digit returns are a real possibility," said Barker French, the company's chief investment strategist.

Wall Street would certainly welcome a positive year after a dreadful 2002. The Dow Jones industrial average suffered an annual loss of 16.8 percent, its worst yearly decline since 1977 when it sank 17.3 percent.

The 2002 results gave the Dow a three-year drop of 27.5 percent.

The Nasdaq composite index fell 31.5 percent, in its second worst year behind 2000 when it dropped 39.3 percent. For the last three years, the Nasdaq lost 66.9 percent.

And, the Standard & Poor's 500 index slid 23.4 percent in its worst year since 1974 when it lost 29.7 percent. The S&P sank 40.1 percent over the past three years.

Analysts said the market has several factors in its favor going into 2003, among them improving earnings, a strengthening economy and interests rates low enough to motivate companies and individuals to spend more.

Wall Street also has history on its side. Four-year slides are rare -- so much so that the Dow has seen only one, which spanned 1929 through 1932. And, there have been only two three-year declines, 1901-1903 and 1939-1941.


Wall Street closes
year with whimper

By Hope Yen
Associated Press

NEW YORK >> Wall Street ended its third straight losing year on a mixed and dreary note as investors' hopes of a resurgent economy in 2002 were stifled by fears of terrorism, war and a wave of accounting scandals.

In the end, 2002 closed with the Dow Jones industrials down 16.8 percent for the year and 27.5 percent since Dec. 31, 1999. Analysts said a slide in the last days of December showed that investors, demoralized by three years of losses, simply aren't willing to make major bets on a turnaround in the new year.

"It's been a terrible year, particularly on top of 2000 and 2001 being down years. It's really unprecedented territory," said Mike Kayes, chief investment officer at Eastover Capital in Charlotte, N.C.

The Dow rose 8.78, or 0.1 percent, to close at 8,341.63, according to preliminary calculations.

The broader market finished mixed. The Nasdaq composite index fell 4.02, or 0.3 percent, to 1,333.52. The Standard & Poor's 500 index rose 0.43, or 0.1 percent, to 879.82.

Advancing issues outnumbered decliners nearly 9 to 5 on the New York Stock Exchange. Volume was light. The Russell 2000 index, a barometer of smaller company stocks, rose 0.87, or 0.2 percent, to 383.10. The NYSE composite index gained 1.31 to 472.87. The American Stock Exchange composite index rose 3.59 to 824.38.

Both the Dow and S&P suffered their first three-year declines since 1939-1941. The Nasdaq posted its first three-year loss since the exchange's inception in 1971.

A disappointing report on consumer confidence today further dampened the buying enthusiasm typically seen at year's end.

The Conference Board said its consumer confidence index dropped to 80.3 percent from a revised 84.9 in November, offering a disappointing outlook for consumer spending. Analysts expected a December reading of 88.0.

Wall Street historically has seen strong gains during the last two weeks of December on hopes of better prospects for the new year. But investors have shied away from major stock commitments on worries that rising oil prices and tensions with Iraq and North Korea will stall the economic recovery.

Indeed, the Nasdaq finished its worst December ever, with a 9.7 percent drop, while the Dow and S&P 500 had their poorest December since 1931, with declines of 6.2 percent and 6 percent, respectively.

For 2002, the Nasdaq dropped about 31.5 percent and the S&P declined 23.4 percent.

"Investors are closing this year in much of the same mood they endured the last 12 months, one of discouragement and concern about factors that are way beyond our control," said Charles G. Crane, strategist for Victory SBSF Capital Management.

Still, analysts cautioned against drawing too many conclusions from recent declines, explaining that volume has been weak due to the holidays.

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