Aug 29, 2003 4 min read

By Amy Baldwin AP Business Writer

NEW YORK (AP) – Wall Street plodded through another quiet preholiday session Thursday, finishing with moderate gains after a last-hour surge of buying.

Despite two upbeat economic reports, prices fluctuated in a narrow range for most of the session. Analysts attributed the market’s tentativeness to concerns that an improving business climate has already been factored into Wall Street’s higher prices.

“The market is the greatest forecasting tool out there. Stocks have been forecasting these (economic) results,” said Gary Kaltbaum, market technician for Investors’ Edge Partner, a money management firm in Orlando, Fla.

Trading was again affected by low volume, the result of many traders and investors being away on vacation.

“This week (before Labor Day) usually is just dismally slow. Trying to make something exciting about this week is tough,” said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.

Thursday’s biggest winner was the Nasdaq composite index, which closed up 18.05, or 1 percent, at 1,800.18, according to preliminary calculations.

The Dow Jones industrial average advanced 40.42, or 0.4 percent, at 9,374.21. The Standard & Poor’s 500 index rose 6.05, or 0.6 percent, to 1,002.84.

Despite a slow week and erratic trading, Thursday’s gains were the third in a row for the Nasdaq and S&P, something that analysts found encouraging – especially where the Nasdaq is concerned. When traders return from vacation, analysts said the market could have greater momentum.

“The Nasdaq keeps prodding along, and that is one thing that is going to be on the radar screens of most investors. As they come back from a long weekend and get re-engaged with their portfolios, they will realize the Nasdaq is at 16-month highs,” Lydon said.

The Nasdaq has trended higher while the Dow has lagged by comparison as investors have moved assets into riskier, growth-oriented sectors and out of safer havens.

The Commerce Department reported that the U.S. economy grew at a 3.1 percent annual rate in the second quarter, stronger than previous estimates. The revised reading on gross domestic product showed the economy picking up at a faster speed than the 2.4 percent growth rate the department projected a month ago.

The reading was also stronger than the 2.9 percent growth rate economists were expecting and marked the economy’s best performance since the third quarter of 2002.

In a second report, the Labor Department said new claims for jobless benefits rose by a seasonally adjusted 3,000 to 394,000 last week. The fact that claims remained below 400,000, a level associated with a weak job market, offered hope that the pace of layoffs is stabilizing.

Investors weren’t that enthused about the data, however, having grown used to receiving one encouraging economic report after another. Analysts say it’s going to take even stronger numbers to keep investors buying stocks and stop them from taking some profits.

Better-than-expected earnings and brokerage house upgrades contributed to Thursday’s gains.

Dollar General rose $1.73 to $22.65 after reporting second-quarter earnings that beat analysts’ expectations by 4 cents a share.

Kirkland’s climbed $1.10 to $18.25 after US Bancorp Piper Jaffray raised its rating on the home decor retailer to “strong buy” from “outperform.”

In technology, Broadcom rose to $1.50 to $27.45, Intel advanced 28 cents to $28.30 and Cisco Systems gained 18 cents to close at $19.19.

Advancing issues outnumbered decliners 9 to 5 on the New York Stock Exchange. Trading volume was light.

The Russell 2000 index, the barometer of smaller company stocks, rose 4.89, or 1 percent, to 495.81.

Overseas, Japan’s Nikkei stock average finished Thursday down 0.8 percent. In Europe, France’s CAC-40 rose 1.3 percent, Britain’s FTSE 100 declined 0.2 percent and Germany’s DAX index gained 0.3 percent.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

AP-ES-08-28-03 1624EDT