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December 21, 2002
NEW YORK -- Stocks surged Friday, as investors shrugged off worries about a war with Iraq and drew some optimism from Federal Reserve Chairman Alan Greenspan's latest assessment of the economy. The three main indexes posted a weekly gain to snap a two-week losing streak.
Analysts said many investors were looking to pick up bargains after three days of declines. News that financial brokerages had reached a settlement on conflict-of-interest charges and that Senate Republican leader Trent Lott resigned his leadership post added to the good mood.
"The fewer of those types of things people have to worry about, the more people can focus on the fact that the economic news is not all that bad and the prospects for the stock market in 2003 are pretty good," said Scott Wren, equity strategist for A.G. Edwards & Sons.
The Dow Jones Industrial Average climbed 146.52, or 1.8 percent, to close at 8,511.32. In the previous three sessions, blue chips fell 262 points to their lowest level in nearly six weeks.
The broader market also finished higher. The Nasdaq composite index rose 8.95, or 0.7 percent, to 1,363.05. The Standard & Poor's 500 index gained 11.51, or 1.3 percent, to 895.76.
For the week, the Dow rose 0.9 percent, while the Nasdaq edged up 0.1 percent and the S&P 500 gained 0.7 percent.
Greenspan told the Economic Club of New York late Thursday that since the Fed's last rate cut Nov. 6, there is some evidence that the "U.S. economy has been working its way through a soft patch." He added that the United States faces no immediate threat of deflation.
Analysts say investors have been hesitant to commit to stocks in recent weeks, particularly amid escalating rhetoric about a possible war with Iraq. On Thursday, the United States declared Iraq in "material breach" of a U.N. disarmament resolution.
In addition, some investors are still looking to cash in some gains from the blue chips' eight-week surge in the autumn, and are uncertain whether Wall Street can stage its traditional holiday rally in the last two weeks of December.
"I think it will be an upward trending market here," said Kevin Gaughan, portfolio manager and equity strategist at Strong Financial Corp. in Milwaukee. "The investment math of our business has been on our side recently. The earnings numbers are better.
"This week, we had some pockets of good news and that's helped," he said.
Nike climbed $3.57 to $45.10 after the sneaker giant said net profit grew 18 percent in the second quarter on strong international sales.
Trading was brisk as Wall Street worked through its first quadruple-witching session, the quarterly expiration of index futures and options as well as individual stock futures and options.
Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange. Consolidated volume was heavy at 2.19-billion shares, compared with 1.70-billion traded Thursday.
The Russell 2000 index, a barometer of smaller company stocks, rose 3.47, or 0.9 percent, to 386.88.
Overseas, Japan's Nikkei stock average finished 0.2 percent higher Friday. In Europe, France's CAC-40 climbed 0.9 percent, Britain's FTSE 100 rose 1.3 percent and Germany's DAX index gained 2.1 percent.