US stocks jump on outlook

  • Business
  • Sunday, 04 May 2003


NEW YORK: Stocks rallied on Friday as investors looked beyond a weak employment report to an eventual economic rebound, but bonds lost much of the week’s gains ahead of the quarterly US Treasury auction next week. 

The dollar held steady, and oil prices slid to near five-month lows as the jump in US unemployment raised concerns over growth in fuel demand. 

Stocks rose across all sectors, with banks, aerospace and technology companies posting the biggest gains. Airline stocks soared after Merrill Lynch issued a bullish investment call on the beleaguered industry. All but two of the 30 blue-chip Dow components ended higher. 

“Since the year 2000 people have been saying there will be a recovery in the second half of the year – but now people are starting to believe it,” said Arnie Owen, managing director of equities at Roth Capital Partners. “There’s cash out there, and it’s being put to work.” 

Stocks opened lower and then rose steadily as the day continued, underpinned by hopes for faster growth in the economy later this year. Investors had lifted the broad Standard & Poor’s 500 index 8% in April as surprisingly strong first-quarter earnings fuelled confidence on Wall Street. 

The Dow Jones industrial average ended up 128.43 points, or 1.52%, at 8,582.68, according to the latest available data. The broader Standard & Poor’s 500 Index rose 13.78 points, or 1.5%, at 930.08. The technology-laced Nasdaq Composite Index rose 30.32 points, or 2.06%, to 1,502.88, its highest level so far this year and the first time it ended above the 1,500 mark since June 2002. 

Friday marked the third straight week of gains for the S&P 500 and the Nasdaq. For the week, the S&P 500 has added 3.47%, the Dow has gained 3.31%, and the Nasdaq has climbed 4.76%. 

Investors largely shrugged off a report showing the US economy shed jobs for the third straight month in April and the unemployment rate hit a four-month high at 6%. Separate data showed orders for US manufactured goods rose by 2.2% in March, their best showing since July 2002. 

“An awful lot of the bad economic news coming out may easily be a low point, and a lot of it reflects the extreme uncertainty building up to Iraq,” said Ann Cody, research director at Hilliard Lyons in Louisville, Kentucky. 

Advancers trounced decliners by a ratio of 25 to 8 on the New York Stock Exchange and 23 to 9 on the Nasdaq. Trading was heavy, with roughly 1.54 billion shares changing hands on the Big Board and more than 1.81 billion on the Nasdaq. 

In other economic news, a government report showed that new orders for US manufactured goods rose by a surprisingly big 2.2% in March, their best showing since July 2002. The news was a bright spot for the troubled US factory sector, which has been the weakest segment of the lagging economy. 

“Those factory orders mean somebody somewhere sees the demand for products increasing, and for Wall Street that means companies have the money for spending,” said Joseph Zock, president and portfolio manager at Capital Management Associates. 

Airline stocks rallied after Merrill Lynch said the worst may be over for the industry. 

AMR Corp, parent of American Airlines, surged 66 cents, or 13.72%, to US$5.47. Northwest Airlines Corp leaped US$1.30, or 15.2%, to US$9.85. Continental Airlines Inc jumped US$1.94, or 19.68%, to US$11.80. 

“The upgrade of the airlines is significant, as it would mean that people are ready to travel and vacation again,” said Donna Van Vlack, director of trading at Brandywine Asset Management in Wilmington, Delaware. – Reuters  

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