Markets mixed following resignations

Dec. 6, 2002 at 5:38 PM
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NEW YORK, Dec. 6 (UPI) -- Stock prices on the New York Stock Exchange and the Nasdaq Stock Market inched up Friday, despite both Treasury Secretary Paul O'Neill and White House adviser Larry Lindsey announcing their resignations earlier in the day.

The blue-chip Dow Jones industrial average nudged up 22.49 points, or 0.26 percent, to 8,645.77, having dropped 114.57 points Thursday. The tech-heavy Nasdaq composite index gained 11.63 points, or 0.82 percent, to 1,422.38, after falling 19.60 points in the previous session.

The broader New York Stock Exchange composite index gained 2.56 points to 485.34, while the Standard & Poor's 500 index rose 5.68 points to 912.23. The American Stock Exchange composite index rose 3.79 points to 825.25, while the Wilshire 5000 Index was 51.14 points stronger at 8,629.16.

Big Board volume was at an estimated 1.25 billion shares, while Nasdaq volume reached 1.53 billion shares.

Stocks came off their lows as the resignations of O'Neill and Lindsey raised hopes a new economic leadership may favor further stimulative measures and the Bush administration is taking concrete steps to tackle the economy.

Blue chips were still struggling in negative territory, following a disappointing November employment report.

Before the market opened, the Labor Department reported non-farm business payrolls declined by 40,000 in November after a 6,000 gain in October, surprising economists who had expected payrolls to climb by 45,000.

The unemployment rate rose by three-tenths of a percentage point to 6 percent from 5.7 percent in October, the highest level since April.

But market analysts said the reshuffling of President Bush's economic team paved the way for more focus on Bush's plans to eliminate the double taxation of stocks.

O'Neill, whose candid comments on economic policy often put him at odds with Wall Street and Capitol Hill, delivered his resignation in a letter to Bush.

"I hereby resign my position as secretary of the Treasury," O'Neill wrote in a letter to Bush dated Friday.

"It has been a privilege to serve the nation during these challenging times. I thank you for that opportunity," O'Neill wrote.

O'Neill, 67, was sworn in as Treasury secretary on Jan. 20, 2001.

Speculation about his possible resignation has swirled for months, but had tempered somewhat following the November elections.

While in office, O'Neill had been criticized for his maverick views and for being out of touch with financial markets.

A former executive of aluminum-giant Alcoa, O'Neill attempted to bring a business-management perspective to his role as Cabinet secretary.

Meanwhile, Lindsey, who had served as the head of the National Economic Council and had been Bush's top economic adviser since his presidential campaign, also announced he would step down.

Frank Slusser, senior market analyst at Standard & Poor's MarketScope, said, "The resignations come as the Bush administration is preparing a fiscal stimulus package centered on a new round of tax cuts, including a likely effort to eliminate the double-taxation of corporate dividends.

"O'Neill had appeared lukewarm to the notion of further tax cuts, emphasizing that the economy remained underpinned by solid fundamentals that would allow growth to pick up steam," Slusser said.

"A new Treasury secretary might help to invigorate the administration's economic policies and thus lead to stronger economic activity than would otherwise be the case," Slusser added.

Meanwhile, U.S. Treasury yields rose. The 10-year bond rose 12/32 to 99 9/32. Its yield, which moves in the opposite direction of its price, slipped to 4.10 percent from 4.14 percent late Thursday.

Analysts said bond yields fell after O'Neill announced his departure, although part of the selling was attributed to some tempering of the initial knee-jerk reaction to disappointing jobs data.

The biggest question in the minds of bond players was whether O'Neill's departure may herald changes in the Treasury's debt policy.

Under O'Neill's watch in October 2001, the Treasury Department stopped issuance of the 30-year bond, which surprised markets and drew criticism from many investors and economists.

In Europe, stock prices ended slightly lower in London and Frankfurt but rose in Paris in moderate pre-weekend trading. The London International Stock Exchange's blue-chip FTSE-100 index slipped 18.90 points, or 0.47 percent, to 4,013.50. The German DAX index fell 17.21 points, or 0.53 percent, to 3,185.77 but the French CAC-40 index rose 27.73 points, or 0.9 percent, to 3,185.77.

Analysts said British and German stocks were pressured by the disappointing U.S. jobless report, but came off their lows after Wall Street bounced back following O'Neill and Lindsey's resignations.

Earlier in Asia, prices on the Tokyo Stock Exchange ended slightly lower as investors opted for the sidelines ahead of next week's slew of domestic economic data releases and a scheduled meeting of the U.S. Federal Reserve's policy board. The blue-chip Nikkei Stock Average, which lost 89.16 points Thursday, fell another 54.31 points, or 0.6 percent, to 8,863.26, for its third consecutive day of declines. The index has lost more than 340 points since Tuesday's close of 9,205.11.

Analysts said stocks drifted with little direction as traders took to the sidelines ahead of next week's slew of domestic economic data releases and a scheduled meeting of the Fed's policy board.

Market players said sentiment remained weak, with the market still facing pressure from institutions trying to unload their cross-share holdings.

Elsewhere in Asia, prices ended slightly lower on the Hong Kong Stock Exchange. The blue-chip Hang Seng Index, which rose 14.15 points during the previous session, slipped 36.13 points, or 0.4 percent, to 9,973.75.

Prices ended slightly lower on the Taiwan Stock Exchange. The Weighted Price Index, which gained 27.91 points during the previous session, fell 16.42 points, or 0.4 percent, to 4,738.98.

Analysts said stocks eased amid jitters about mayoral elections this weekend in the island's two largest cities.

Prices eased on the South Korean Stock Exchange in reaction to Wall Street's declines. The Korean Composite Stock Price Index, or Kospi, which rose 8.26 points during the previous session, slipped 4.67 points, or 0.7 percent, to 718.09.

Prices also ended lower on the Australian Stock Exchange. The blue-chip All Ordinaries Index, which rose 10.60 points during the previous session, lost 13.30 points, or 0.4 percent, to 2,990.70.

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