Stocks rise on easing of terror alert - East Valley Tribune: Business

Stocks rise on easing of terror alert

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Posted: Thursday, February 27, 2003 2:09 pm | Updated: 1:15 pm, Thu Oct 6, 2011.

NEW YORK - Relieved that the U.S. government was lowering the national terror alert level and heartened by reports that Iraq would destroy some missiles, investors bid stocks higher Thursday, reversing much of the previous session’s big sell-off.

Positive economic news - a report of an unexpectedly strong rise in orders to U.S. factories for big-ticket items - also fueled the advance.

Still, analysts remained dubious about the market’s ability to forge a real upward trend in the face of war fears.

“Until this Iraq situation is resolved the market is always going to be running the risk of getting into this war without knowing what it means’’ to the economy, said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.

The Dow Jones industrial average closed up 78.01, or 1 percent, at 7,884.99, recovering much of Wednesday’s loss of 102.52.

The broader market also rallied. The Nasdaq composite index rose 20.26, or 1.6 percent, to 1,323.94. The Standard & Poor’s 500 index advanced 9.73, or 1.2 percent, to 837.28.

Wall Street relished news that the Bush administration was lowering the terror alert level from orange - the second highest status - to yellow, suggesting that the threat of a terrorist attack in the United States has eased somewhat.

The market also took heart from a report by Egypt’s news agency that Iraq would announce later in the day that it will comply with a U.N. order to begin destroying its Al Samoud 2 missiles by the weekend.

There was no such comment Thursday from the Iraqi government. The Egyptian Middle East News Agency had quoted unidentified sources in Baghdad as saying the measure was aimed at depriving the United States of justification for attack.

Investors also welcomed the Commerce Department report that orders to U.S. factories for so-called durable goods soared by 3.3 percent in January, the best showing in six months. The jump in orders for items expected to last at least three years was better than the 1 percent advance economists had forecast and was seen as an encouraging sign that the battered manufacturing sector could be rebounding.

Still, analysts are doubtful about the market’s ability to sustain any gains, believing investors will hold back until it’s clearer if and when there will be a war, and what effect it will have on the U.S. economy.

“Any up day is a good day these days. But I am not giving it too much weight. ... There is still a lot of work to be done in this market. It is still trying to hammer out a low,’’ said Gary Kaltbaum, market technician for Investors’ Edge Partners in Orlando, Fla.

Shares of major manufactures traded higher on the durable goods report. DaimlerChrysler rose 73 cents to $30.07, while Maytag advanced 61 cents to $24.11.

Better-than-anticipated earnings and brokerage house upgrades gave other stocks a lift. PG&E Corp. rose 42 cents to $13.19 on fourth-quarter profits that beat analysts’ expectations by 3 cents a share.

Darden Restaurants, which operates the Red Lobster and Olive Garden chains, climbed $1.05 to $17.85 after J.P. Morgan raised its rating to “overweight’’ from “neutral.’’

But Wall Street was disappointed by a report from the Commerce Department that showed sales of new homes plunged by 15.1 percent last month following a record 4.1 percent advance for December. Investors sold off home builders including Centex, down 17 cents to $55.56.

Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange. Trading was light at 1.27 billion, below an already light 1.34 billion on Wednesday.

The Russell 2000 index, which tracks smaller company stocks, rose 3.46, or 1 percent, to 361.43.

Overseas, Japan’s Nikkei stock average finished Thursday essentially flat, eking out a gain of just 0.03 percent. In Europe, Britain’s FTSE 100 fell 0.7 percent, France’s CAC-40 rose 2.2 percent, and Germany’s DAX index climbed 2.6 percent.

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