Markets & Finance

Stocks Finish Higher


Stocks closed with moderate gains, led by technology issues, as the major indexes rebounded from last week's poor showing.

The Dow Jones industrial average rose 67.16 points, or 0.72%, to 9,380.24. The broader Standard & Poor's 500 index was up 9.74 points, or 0.98%, to 1,006.59. The Nasdaq composite gained 32.52 points, or 1.81%, to 1,824.59.

"Bulls have taken the lead in the stock market, which is bouncing back after the Nasdaq endured a 6% decline last week for its worst showing in over a year," says economic research outfit MMS International. From a technical standpoint, MMS says, "Friday's poor action appeared somewhat climactic on a very short term basis as both the Dow and S&P 500 broke under their key 50-day moving averages and are correcting higher."

Among stocks on the move Monday, Wal-Mart Stores (WMT) says it expects same-store sales in its flagship stores for September to be at the high end of its original forecast for growth of 3% to 5%. Wal-Mart stock rose on the news.

Many other retail stocks, however, fell as investors rotated back into tech, according to S&P MarketScope. One of the losers was JC Penney (JCP). The retailer says its Eckerd drug store unit's September same-store sales were tracking below expectations, while same-store sales at its department stores were tracking at the low end of its forecast as demand slowed in the last week.

Technology stocks rallied on a report from the Semiconductor Industry Assn. that showed global semiconductor sales rising 12.5% in August. Semiconductor stocks also got a boost after JP Morgan's Christopher Danely said in a research report that pricing is improving. The analyst increased his 2003 industry sales growth forecast from 12% to 15%.

Nokia (NOK) was higher on a favorable mention in Barron's.

On the downside was Nvidia (NVDA) after Merrill downgraded the stock to sell from neutral.

In after-hours trading Monday, shares of Sun Microsystems (SUNW) fell after the company said it expects a fiscal first-quarter GAAP loss per share of approximately 7 cents to 10 cents, including a tax provision of approximately $34 million or approximately 1 cent per share, "for that period which reflects a particularly difficult quarter for the company due in part to intense market and competitive dynamics." Analysts were expecting Sun to post a loss (on average) of 2 cents per share for the quarter.

In addition, Sun announced that it will recognize a $1.051 billion non-cash charge in its fourth quarter of fiscal 2003 to increase a valuation allowance for its net deferred tax assets. As a result of this charge, Sun says its revised net loss for the fourth quarter of fiscal 2003 is $1.039 billion, or a net loss per share of 32 cents.

In deal news, insurer John Hancock Financial (JHF) agreed to be acquired by Canada-based Manulife Financial (MFC) in a stock-for-stock merger worth about $10.3 billion.

Hughes Electronics (GMH) shares rose after the company's DirectTV unit expects to add 320,000 net new owned and operated subscribers in the third quarter. DirectTV raised guidance of 900,000 additions in 2003 to 1.05 million.

Gold stocks also rose as December gold prices rallied on weakness in the U.S. dollar.

In economic news, personal income rose 0.2% in August, vs. July's 0.3% rise. Personal spending rose 0.8%, vs. July's 0.9% gain. Both numbers were near expectations.

The key economic release of the week is Friday's employment report. Economic research unit MMS expects the U.S. unemployment rate to tick up to 6.2% in September from 6.1% in August.

On Tuesday, consumer confidence figures and the Chicago PMI for September will be released. Among other reports, construction spending will be out on Wednesday, followed by weekly jobless claims and factory orders on Thursday.

Treasury Market

Treasuries lost momentum ahead of Friday's payroll report, with a dose of dollar weakness thrown into the mix, says MMS International. The firm income and spending data was an expected result of the latest tax cut measures. The dollar stole the show, however, with a sharp 1.5% stumble on rumors that an investor advisory service said the dollar had further room to fall and related talk that the U.S. Treasury might abandon strong dollar policy (later denied), says MMS International.

World Markets

European stock markets lost ground. London's Financial Times-Stock Exchange 100 index was down 14.4 points, or 0.35%, to 4,142.7.

In Paris, the CAC 40 fell 28.05 points, or 0.87%, to 3,188.71. Germany's DAX index lost 1.47 points, or 0.04%, to 3,323.38. Continued weakness in the dollar increased worries about U.S demand for increasingly more expensive exported goods, according to S&P MarketScope.

Asian markets finished lower Monday. In Japan, the Nikkei 225 index lost 88.87 points, or 0.86%, to close at 10,229.57. Ahead of Japan's semi-annual book close on Sep. 30, domestic investors and dealers largely took a wait-and-see stance, but concerns about the strong currency continued to hurt exporters and blue-chips.

In Hong Kong, the Hang Seng index fell 148.87 points, or 1.32%, to close at 11,141.28.


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