Closing Market Report

Star-Bulletin news services

Dow up more than
100 points as economic
news lifts stocks

NEW YORK >> The Dow Jones industrial average and the Standard & Poor's 500 index reached their highest levels in nearly 19 months yesterday as upbeat economic reports suggested inflation is under control and better times are ahead for the nation's battered manufacturing sector.

The rally drove the Dow up more than 100 points, and also helped the Nasdaq composite index close higher after being down for much of the session. Analysts said investors were rotating away from riskier tech stocks and into large-cap value companies as they seek to lock in gains before the end of the year.

"The long-term economic numbers are strengthening, which I think is good, so now let's see if the corporate numbers remain favorable," said Stephen Carl, head of equity trading at The Williams Capital Group. "If we can get the moon and all the stars lined up right, we could see a very good start to the next year."

Recent events -- such as the Dow jumping past the 10,000 level and the weekend capture of fallen Iraqi leader Saddam Hussein -- also have helped boost investor confidence.

Advancing issues outnumbered decliners about 3 to 2 on the NYSE. Consolidated volume was heavier, at 1.91 billion shares, compared with 1.90 billion shares traded Monday.

The Dow closed up 106.74, or 1.1 percent, at 10,129.56, its highest level in nearly 19 months. It last closed higher on May 23, 2002, when it ended the day at 10,216.08.

The broader market gauges also closed higher. The S&P 500 reached an almost 19-month high, closing up 7.09, or 0.7 percent, at 1,075.13. It last finished higher on May 24, 2002, when it closed at 1,083.82. The Russell 2000 index, which tracks smaller company stocks, closed up 2.49, or 0.5 percent, at 537.74.

And the tech-heavy Nasdaq struggled into positive territory in the last hour of the session, closing up 6.03, or 0.3 percent, at 1,924.29.

The price of the Treasury's 10-year note closed up 7/32 point, while its yield fell to 4.23 percent from 4.26 percent Monday. Two-year Treasury notes were up 1/32 point and yielded 1.80 percent, down from 1.83 percent Monday.

A series of positive economic reports contributed to the rally. The Federal Reserve reported a 0.9 percent rise in industrial production for November, well beyond analyst expectations. It was the strongest reading since October 1999, and signaled that the worst may be over for the long-suffering manufacturing sector.

"Industrial production was the single biggest surprise," said Mark Vitner, an economist with Wachovia Corp. in Charlotte, N.C. "It suggests not only is the rate of the increase in production accelerating, but a broader assortment of industries are seeing an improvement, and that tells me the recovery is much more durable than some might have thought."

Separately, the Labor Department reported a 0.2 percent dip in its Consumer Price Index, the government's most closely watched inflation barometer. Economists were forecasting a tiny 0.1 percent advance.

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