NEW YORK >> Wall Street had a strong start to 2003 today with stocks posting their best gains in more than two months. The Dow Jones industrials soared more than 260 points following an unexpected surge in the manufacturing sector. Stock market rally
rings in new yearBy Amy Baldwin
Associated Press"We got a positive manufacturing report and that really was a turn-on," said Larry Wachtel, market analyst at Prudential Securities.
The rally was also owed to investors' relief at the end of three years of declines and to the start of a new tax year, a time when investors are busy buying stocks.
The Dow closed up 265.89, or 3.2 percent, at 8,607.52. The Dow claimed its biggest one-day gain since Oct. 15, when it rose 378.28. The rally came on the heels of the Dow having lost 16.8 percent in 2002 and 27.5 percent from 2000-2002.
The broader market was also sharply higher. The Nasdaq composite index rose 49.34, or 3.7 percent, to 1,384.85 after falling 31.5 percent last year and 66.9 percent over the past three years. The last time the Nasdaq had a bigger one-session gain was Oct. 15 when it climbed 61.91.
The Standard & Poor's 500 index advanced 29.21, or 3.3 percent, to 909.03, following last year's loss of 23.4 percent and a three-year drop of 40.1 percent. The last time the S&P had a stronger finish was Oct. 15, when it rose 39.83.
Advancing issues outnumbered decliners more than 3 to 1 on the New York Stock Exchange. Trading volume was light as it has been for the past two weeks due to many traders being absent during the winter holidays. The market was closed yesterday for the New Year's.
The Russell 2000 index, which tracks smaller company stocks, rose 9.49, or 2.5 percent, to 392.58. The NYSE composite index gained 13.86 to 486.73. The American Stock Exchange composite index rose 9.23 to 833.61.
The market was cheered by news that U.S. manufacturing activity grew in December for the first time in four months. The Institute for Supply Management said its index of business activity rose to 54.7 in December from the 49.2 in November. A reading above 50 indicates the manufacturing sector is growing, while a reading below 50 signals contraction in the sector.
Analysts had forecast a reading of 50.1 for the month. The last time the index was above 50 was in August.
"Housing had been strong and consumers were hanging in there. The manufacturing side had been a laggard ... and then along comes a number that knocked our socks off," Wachtel said.
Today's advance was embraced by investors disappointed that Wall Street had forfeited the so-called Santa Claus rally.
Recent worries about rising oil prices thwarted the usual year-end advance.
But analysts were wary of reading too much into one day of trading, which was light due to the winter holidays, and one economic report, the first of 2003.
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