Stock market continues upswing

By Amy Baldwin
Saturday October 19, 2002


NEW YORK — Momentum from Wall Street’s October rally lifted stocks Friday and gave the major market indexes their second straight winning week — the first such streak in two months. Despite an early decline, many investors resisted the urge to take profits. 

The gain was surprising given stocks’ recent big ride, which sent the Dow Jones industrials soaring more than 1,000 points in a week. Analysts expected the market to give up more ground. 

“We have gone from being extremely oversold to very overbought. It is due for a rest,” said Brian Bush, director of equity research at Stephens Inc. 

The Dow closed up 47.36, or 0.6 percent, at 8,322.40 after having fallen as much as 127 points in the early going. In the past seven sessions, the Dow has climbed 1,036. 

The market’s broader indicators were also higher. The Nasdaq composite index rose 15.57, or 1.2 percent, to 1,287.86. The Standard & Poor’s 500 index advanced 5.19, or 0.6 percent, to 884.39. 

All three gauges had their second consecutive winning week, something they last accomplished in the two weeks that ended Aug. 24. The Dow finished the week up 6 percent, while the Nasdaq rose 6.4 percent and the S&P climbed 5.9 percent. 

Analysts and investors say they are hopeful stocks are finally moving up from some dismal lows. The market has been making surprisingly strong upward progress since Oct. 9 when the Dow fell to a five-year low, joining the S&P. The Nasdaq was at a six-year low. 

But analysts and investors also remain cautious due to lingering doubt about the pace of recovery of earnings and the economy. 

On Friday, investors rewarded companies that reported encouraging results. 

Microsoft rose $2.38 to $53.15, having announced earnings late Thursday that were 7 cents a share higher than analysts’ estimates. 

Avon jumped $3.60 to $49.79 on third-quarter earnings that beat expectations by a penny a share. 

Merck advanced 28 cents to $51.03 after meeting expectations and reaffirming its 2002 forecast calling for flat results. 

But the advance was curbed by some profit taking. Shares of companies that posted better-than-expected earnings results this week, such as General Motors and Johnson & Johnson, fell as investors cashed in some gains. GM fell $1.09 to $34.31, while J&J declined 85 cents to $59.35. 

The market fought hard to advance Friday after rallies Tuesday and Thursday, when the Dow soared 378 points and 239 points. Analysts said there is still skepticism in the market as past rallies have been cut short by disappointing economic and earnings news. 

“We just have to wait a few more trading sessions to see if we have a more positive tone,” said Stephen Carl, principal and head of equity trading at The Williams Capital Group. 

The Russell 2000 index, the barometer of smaller company stocks, rose 0.80, or 0.2 percent, to 363.37. 

Advancing issues were even with decliners on the New York Stock Exchange. Consolidated volume was light at 1.74 billion shares, down from Thursday’s 2.21 billion. 

The Labor Department reported that consumer prices increased a moderate 0.2 percent in September. The rise in the Consumer Price Index, which is the government’s most closely followed gauge of inflation, was in line with economists’ forecasts.