DOW - Closes above pre-attack level

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11/09 16:24 Dow Closes Above Pre-Attack Level; Indexes Climb for the Week By Danielle Sessa

New York, Nov. 9 (Bloomberg) -- The Dow Jones Industrial Average rose, closing at its highest level since before the Sept. 11 terrorist attacks. Microsoft Corp. led the gain as stocks advanced on optimism lower interest rates will spur a rebound in the economy and corporate profits.

``We are getting close to the bottom of earnings getting worse,'' said John Forelli, who helps oversee $20 billion at Independence Investment LLC in Boston. ``A stable earnings outlook, with interest rates falling as low as they have, makes the equity market attractive.''

The Dow climbed 20.48, or 0.2 percent, to 9608.00. It closed at 9605.51 on Sept. 10, the day before the attacks, and fell as much as 14 percent when trading resumed after a four-day halt.

The Standard & Poor's 500 Index gained 1.77, or 0.2 percent, to 1120.31. The Nasdaq Composite Index gained 0.72 to 1828.49.

All three benchmarks gained for the fifth week in seven since hitting post-attack lows on Sept. 21. The Nasdaq jumped 4.7 percent, while the S&P 500 and the Dow climbed 3.1 percent.

Almost 1.1 billion shares traded on the New York Stock Exchange, 17 percent below the three-month daily average. Advancing and declining stocks were about even on the Big Board and the Nasdaq Stock Market.

Reports this week showed an unexpected rise in consumer confidence in November and fewer than forecast new claims for unemployment benefits, helping spur optimism that the Federal Reserve's 10 interest-rate reductions are reviving the economy, investors said.

``I almost wonder if we are going to be surprised, as the next couple of weeks develop, how quickly things turn around,'' said Hugh Whelan, who helps oversee $7 billion at Aeltus Investment Management Inc. in Hartford, Connecticut.

`Overly Confident'

Still, some investors are concerned the outlook for rebounding profits hasn't justified the S&P 500's 16 percent rally from its post-Sept. 11 low. The Nasdaq has rallied 28 percent since then.

``The market was overly confident that we were going to recover in the first quarter or second quarter of 2002,'' said Matt Johnson, head of trading at Lehman Brothers Inc. ``Now we are seeing chinks in the armor.''

A report today showed prices paid to producers had their biggest-ever monthly drop in October, a sign slumping demand is forcing companies to charge less for their goods and could squeeze profits.

Analysts expect earnings will fall this quarter and next before rebounding in the second quarter of 2002. Profits for S&P 500 companies are projected to rise 9.3 percent in the second quarter of next year, about half the 18.4 percent increase expected on Oct. 1, according to Thomson Financial/First Call.

-- Anonymous, November 10, 2001


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