Closing Market Report

Star-Bulletin news services

S&P quarter best
since end of 1998

NEW YORK >> Wall Street ended a stunning second quarter quietly yesterday as fund managers spent the day repositioning their holdings, but the narrow losses didn't stop the Standard & Poor's 500 index from achieving its best quarterly gain since the final three months of 1998.

The Dow Jones industrials and the Nasdaq composite index claimed their best quarter since the last quarter of 2001.

The stock gauges' accomplishments reflected investors' belief that earnings, the economy and stock prices will recover in the second half of the year.

"It was certainly a quarter when psychology in the market changed substantially and with stocks discounting a strong rebound in the second half of the year," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.

Trading was light and choppy, not surprising given that it was the end of the quarter and a short week with the Independence Day holiday. The market typically experiences volatility at a quarter's end due to window-dressing, or an attempt by fund managers to make their portfolios look as good as possible in statements to shareholders.

The S&P 500, the broadest of Wall Street's major indexes, closed down 1.72, or 0.2 percent, at 974.50. For the quarter, the S&P rose 14.9 percent. The last time the S&P had a bigger quarterly gain was the last three months of 1998, when it climbed 20.9 percent.

The Dow declined 3.61, or 0.04 percent, to 8,985.44. The blue chips gained 12.4 percent in the April-June period, their best quarterly showing since the last three months of 2001, when it rose 13.3 percent.

The Nasdaq yesterday fell 2.46, or 0.2 percent, to 1,622.80. The Nasdaq rose 21 percent in the quarter, its best quarterly win since gaining 30 percent in the last three months of 2001.

Contributing to yesterday's fluctuations was the annual rebalancing of the Russell 2000 index, which tracks smaller company stocks. Companies whose market capitalizations have grown sufficiently move up to the Russell 1,000, while newer companies or those whose market value has shrunk fill out the Russell 2,000. Yesterday, the Russell 2000 fell 0.38, or 0.1 percent, at 448.37.

Advancing issues matched decliners on the New York Stock Exchange. Volume was light at 1.59 billion shares, but above Friday's 1.24 billion. The NYSE composite index slipped 4.44 to 5,505.17. The American Stock Exchange composite index fell 1.51 to 969.20.

In economic news, the Purchasing Management Association of Chicago reported that its index of area business activity rose to 52.5 in June on a seasonally adjusted basis from 52.2 in May. A reading above 50 signals that the manufacturing sector is expanding, while a reading below 50 indicates it is contracting.

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