Stocks end mixed for week's opener

NEW YORK, June 10 (UPI) -- Stock prices ended mixed, with the New York Stock Exchange marginally up and the Nasdaq Stock Market slightly down Monday, coming after last week's brutal carnage in the stock market.

But market watchers remain wary of any gains with little in the way of encouraging economic or corporate data helping to lift the battered psyche of investors.

The blue-chip Dow Jones industrial average, which plunged 335.58 points last week, gained 55.73 points, or 0.58 percent, to close at 9,645.40. The tech-heavy Nasdaq composite index, which sank 80.25 points last week, dropped 4.79 points or 0.31 percent, to close at 1,530.69.

The broader New York Stock Exchange composite index gained 1.82 points to close at 553.39 while the Standard & Poor's 500 index ended up 3.21 points to close at 1,030.74.

The American Stock Exchange composite index dropped 11.73 points to close at 915.03 while the Wilshire 5000 Index gained 19 points to close at 9,776.38.

Volume was 1.37 billion on the Big Board and 1.44 billion on the Nasdaq Stock Market.

Market breadth was mixed with advancers meeting decliners 15 to 15 on the NYSE and decliners beating advancers by 18 to 15 on the Nasdaq.

Analysts said after last week's meltdown, the markets showed some strength amid some bargain hunting.

Market watchers said that the slight easing in tensions between nuclear rivals India and Pakistan is also pushing some relief into the market. But with this type of trading, positive moves can be easily erased.

On an up note, Banc of America's Tom McManus increased his equity weighting by 5 percent to 55 percent on belief the market is more attractively valued.

McManus feels the stock market's recent weakness hinges on an out-of-balance economy, a consumer that's likely to require additional stimulus to keep up the current pace of spending, rapidly rising government consumption that may boost demand but not productivity, and an increasingly suspect corporate sector.

"For the balance of 2002, we believe the economic rebound may sputter but not swoon," McManus said. "Despite our continuing downbeat view of the economy, valuations in the market have improved and investor sentiment has become more cautious. We recognize these as improvements to the overall equity outlook."

The strategist's bond asset allocation was reduced to 40 percent from 45 percent while cash remained at 5 percent. He concedes that current market opportunities are not as attractive as in March or September of last year.

"Given the recent string of losses in the market, we believe a rally may develop in the near term that could carry the (stock) averages a few percent higher and help rebuild bullish sentiment," McManus concluded.

Tobias Levkovich, Salomon Smith Barney's chief U.S. equity institutional strategist, trimmed his S&P 500 target to 1,200 to 1,250 from 1,300 to 1,350 while the Dow Jones industrials' target was reduced to 11,200 from 11,400.

Levkovich noted that technology and healthcare have been the biggest drags on the broad indexes, though valuation still suggests stocks should outperform bonds.

"While it is difficult to pinpoint when rallies begin, we would note that we are very close to the point where earnings should turn more meaningfully and that valuations seem to be line with previous bottoms," he told clients. "Thus, it looks like another leg of the recovery story is coming into place."

Kenneth MacFadyen, analyst at Thomson Financial Corporate Group, said, "Boeing is expected to see some action after the aerospace giant was awarded a contract from the Transportation Department to provide bomb scanning devices that will be used on checked baggage. The deal guarantees Boeing $508 million for the first year, and is worth up to $1.37 billion over five, marking the largest contract awarded by the Transportation Security Administration for aviation security."

Separately, Lockheed Martin announced it has also received a contract from the TSA to upgrade airport security, which initially is worth $350 million, but could reach $490 million with options.

Analysts noted accounting worries and the geopolitical events overseas still hang over the market. Beyond that, though, the economic data look pretty positive, leaving investors uncertain of which direction to take.

Wall Street will have a heavy amount of economic data to digest later in the week, but Monday the calendar was empty.

There was some positive news concerning the international conflicts that caused market jitters all last week.

The Indian Foreign Ministry said it has lifted a ban on Pakistani flights over India and also said there is no alternative to peace in the conflict between the two nuclear powers.

But, analysts noted the telecom sector made investors wary after Merrill Lynch lowered its 2002 and 2003 earnings estimates for handset maker Nokia ahead of the Finnish company's quarter update due Tuesday.

Merrill reiterated its intermediate-term neutral and long-term strong buy ratings on the stock, but cautioned that the company's market share could decline to 33 percent by 2004 from 35 percent this year.

Meanwhile, U.S. Treasury prices inched higher. The 10-year bond rose 8/32, its yield, which moves in the opposite direction of its price, slipped to 5.03 percent from 5.07 percent late Friday.

In Europe, stock prices ended slightly higher in London and Paris but eased in Frankfurt. The London International Stock Exchange's blue-chip FTSE-100 index added 6.3 points to 4,926.7. The German DAX index lost 40.58 points, or 0.88 percent, to 4,569.60 and the French CAC-40 index rose 4.67 points to 4,024.94.

Analysts said British stocks were lifted slightly as talk of merger and acquisition activity boosted tobacco stocks and outweighed a sagging banking sector after Abbey National warned on profits.

German stocks were pressured by a report showing German retail sales falling for the fourth month in five in April, as rising unemployment prompted consumers to scale back spending.

Sales in Europe's largest economy fell 2.4 percent from March, the Federal Statistics Office said. Economists had expected a drop of 0.3 percent.

Earlier in Asia, prices on the Tokyo Stock Exchange ended lower in lackluster trading, as early bargain hunting in high-tech issues failed to spark any follow-through buying. The blue-chip Nikkei Stock Average of 225 selective issues, which fell 136.41 points on Friday, lost 68.32 points, or 0.6 percent, to 11,370.21 -- its lowest close since May 14.

Analysts said investors were increasingly nervous about the outlook for New York stocks, and foreign buying -- a key factor behind the Tokyo market's advance this year -- appeared to have run out of steam.

Another factor weighing on the market is Friday's settlement of the June futures contract, which could spark a bout of volatility.

Elsewhere in Asia, prices ended marginally higher on the Hong Kong Stock Exchange after a session of directionless trading in blue chips. The blue-chip Hang Seng Index added 4.13 points, or 0.04 percent, to 11,288.84.

Analysts noted several factors keeping the market quiet, including the awaiting of details, due out Friday, on how many units of the Tracker Fund, the Hang Seng Index-tracking fund, will be sold in the third quarter.

Buying was also contained by concerns related to the performance of the U.S. market and this left room for China stocks to step into the limelight, given their immunity to overseas uncertainties, analysts said.

Prices ended higher on the South Korean Stock Exchange, supported by strength in technology issues. The Kospi Composite Index rose 16.74 points, or 2.11 percent, to 811.90.

Trading activity was light ahead of the soccer game against the United States. Many Korean companies closed or open only for a half-day to allow people see the game.

After the market closed, South Korea and the U.S. ended the game with a 1 to 1 tie. The result gave both teams chances of reaching the second round.

Prices ended higher on the Taiwan Stock Exchange, lifted by strength in technology issues. The Weighted Index gained 66.31 points, or 1.22 percent, to 5,499.33.

Meanwhile, markets in Sydney, Australia, were closed in observance of Queen Elizabeth II's birthday. Trading will resume on Tuesday.