Stocks on upside after 3 days down

NEW YORK, Nov. 12 (UPI) -- Stock prices on the New York Stock Exchange and the Nasdaq Stock Market ended higher in fairly active trading Tuesday, lifted by some favorable earnings results and strength in technology issues.

The blue-chip Dow Jones industrial average, which lost 178.18 points Monday, added 27.05 points, or 0.32 percent, to close at 8,386.00. The tech-heavy Nasdaq composite index, which fell 40.09 points in the previous session, gained 30.37 points, or 2.3 percent, to close at 1,349.56.


The broader New York Stock Exchange composite index added 2.22 points to close at 470.17 while the Standard & Poor's 500 index ended ahead 6.76 points to close at 882.95.

The American Stock Exchange composite index fell 3.93 points to close at 814.30.

Volume was 1.6 billion on the Big Board and 1.5 billion on the Nasdaq Stock Market.


Analysts said decent earnings from the likes of retailer J.C. Penney and diversified manufacturer Edo are bringing investors back into the market after a three-day hiatus, but their zeal may be tempered by news of Iraq's parliament unanimously condemning the U.N. resolution mandating a return of weapons inspectors. The final decision lies with Saddam Hussein.

J.C. Penney reported its third-quarter earnings before items topped analysts' expectations, an encouraging sign for consumer demand.

Edo, which has a broad range of businesses in defense, communications and materials, has also beat analysts estimates, suggesting some decent demand in a variety of sector.

Analysts said stocks also drew support on hopes the battered technology industry is seeing a turnaround after Web equipment maker Cisco Systems Inc. said its order backlog is on the upswing.

Cisco, seen as a benchmark for the health of U.S. companies, said its backlog was up from September. Analysts use order backlog data to gauge future sales.

Tech stocks also were supported on news that No. 2 business software maker Oracle, said it expects a return to profitability in 2003 after nearly two years of declining revenue.

Speaking at Oracle's tech and user conference in California, the firm's chief financial officer late Monday reiterated its fiscal second-quarter earnings per share forecast for a profit of 8 cents to 9 cents; analysts currently expect a profit of 8 cents.


Another positive for the markets was the first-half results report from European mobile phone operator Vodafone. It said its first-half loss narrowed, and that it expects to see revenue growth in the second half of the fiscal year.

Meanwhile, on the economic front, the Richmond Fed's manufacturing shipments index firmed to a plus 6 reading in October from minus 12, though manufacturing employment was minus 10 versus minus 7 in September.

Service revenues fell sharply to minus 27 from plus 10, pulled down by retail revenues, which were down to minus 35 in October versus the previous month's reading of minus 3.

The sharp fall in retail revenues likely reflected the impact of the sniper shootings in region in early October and were not representative of conditions in the country as a whole, economists said.

The session also was dominated by a heavy schedule of Federal Reserve officials speaking.

In Mexico City, Fed Chairman Alan Greenspan's prepared remarks did not touch on the U.S. economic outlook, addressing instead the recent economic performance of different Latin American countries.

However, other Fed officials did comment on the economy. Fed Vice Chairman Roger Ferguson in Pittsburgh said the blizzard of interest-rate cuts undertaken by the Fed over the last two years should be sufficient to ensure an economic recovery.


"With last week's easing in monetary policy, the pieces are in place to engender a gradual strengthening in economic activity in coming quarters," Ferguson told an economic conference at Carnegie Mellon University.

Although the economy is expected to slow to a rate of growth below 2 percent in the fourth quarter, Ferguson said that doesn't indicate that the interest-rate cuts aren't working. "The fact that the economy has grown at only a moderate pace this year despite sizable reductions in interest rates over the past year and a half has led some observers to argue that monetary policy has lost its punch," he said, "In my opinion, that argument is wrong."

"To judge the effectiveness of monetary policy, one must consider what the economy would have looked like in the absence of easing," he said. "In this light, given the severity of the shocks that have hit the economy, a better interpretation may well be that recent events validate once again the potency of monetary policy."

Minneapolis Fed President Gary Stern addressed the La Crosse economic summit on "What's Ahead For the Economy in La Crosse." He said that growth for this year should be equal to or better than 2002.


Meanwhile, U.S. Treasury prices eased. The 10-year bond fell 3/32 to 101 7/32. Its yield, which moves in the opposite direction of its price, rose to 3.85 percent from 3.84 percent late Friday. The bond market was closed on Monday for the Veterans Day holiday.

In Europe, stock prices ended higher in moderate trading in London, Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index gained 64.7 points, or 1.6 percent, to 4,080.3. The German DAX index rose 45.64 points, or 1.5 percent, to 3,087.70 and the French CAC-40 index added 10.94 points, or 0.4 percent, to 3,064.64.

Analysts said European stocks were lifted by gains in telecommunications and technology stocks following news of strong earnings from telecom heavyweight Vodafone.

Analysts said Vodafone's strong results detracted from Iraq war fears.

But, despite the overall strength, banking and insurance issues continued to slide. Banks were pressured after Germany's Commerzbank posted a narrower third-quarter loss and confirmed that it was scaling back its investment-banking activities outside Germany.

Earlier in Asia, prices on the Tokyo Stock Exchange ended fractionally higher, snapping a three-day losing streak on some bouts of bargain hunting. Japan's blue-chip Nikkei Stock Average of 225 selective issues, which lost 230.40 points Monday, rose 4.40 points, or 0.05 percent, to 8,464.77. The key index had been down as low as 8,380.46 earlier in the session.


Analysts said stocks snapped a three-day losing streak as bargain hunters came out to buy beaten-down telecom and other tech issues.

Meanwhile, the U.S. dollar strengthened slightly against the Japanese yen after Japan's Finance Minister Masajuro Shiokawa called the yen's recent rise "unnatural" and said the government is ready to intervene the market if the yen rises further.

The dollar bought 119.67 yen in Asia action, compared to 119.40 yen in New York late Monday. The greenback has fallen nearly 4.7 percent against the yen in the past three weeks.

A stronger yen eats into the overseas profits of Japan's export giants when repatriated into the Japanese currency.

Elsewhere in Asia, prices ended slightly higher on the Hong Kong Stock Exchange in light trading as investors were unsure about short-term market direction and the timing of expected government measures for the ailing property sector. The blue-chip Hang Seng Index rose 32.96 points, or 0.3 percent, to 9,613.84.

The market has speculated the government will halt the sale of government land and suspend sales of subsidized housing to try and push up property prices, which have shed 65 percent in the past five years.

Prices ended lower on the South Korean Stock Exchange. The key Kospi Composite Index lost 0.5 percent to 654.43 as a stronger won continued to hurt exporters' shares.


Meanwhile, prices ended slightly higher on the Taiwan Stock Exchange, lifted by some late bouts of bargain hunting. The Weighted Index rose 0.3 percent to 4,676.47.

Elsewhere in the Pacific region, prices ended fractionally higher on the Australian Stock Exchange. The All Ordinaries Index added 0.2 percent to 2,942.90.

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