Originally created 08/08/03

Stocks largely advance following upbeat reports



NEW YORK -- Better-than-expected reports on retail sales and productivity sent stocks mostly higher Thursday, but gains were limited amid investors' lingering concerns that prices might still be too high.

"It seems clear to me this economy will accelerate and earnings growth is going to be good," said Scott Wren, equity strategist for A.G. Edwards & Sons. "But we've had a lot of talk that in the second half of the year we'll finally see some big earnings and economics numbers. ... There's still concern the second half won't pan out the way many people thought."

The Dow Jones industrial average closed up 64.71, or 0.7 percent, at 9,126.45.

The broader market finished mixed. The Nasdaq composite index slipped 0.47, or 0.03 percent, to 1,652.21. The Standard & Poor's 500 index rose 7.04, or 0.7 percent, to 974.12.

The Labor Department reported business productivity grew at a surprisingly strong annual rate of 5.7 percent in the second quarter, the best showing since fall 2002. The reading was also an improvement from the 2.1 percent growth notched in the first quarter of this year.

In a separate report, the department said new jobless claims fell by a seasonally adjusted 3,000 to a six-month low of 390,000 for the work week ending Aug. 2. It was the third week in a row that claims stood below 400,000, a level associated with a tepid job market.

Stocks have been pressured in recent weeks by rising interest rates and investors' worries that the recent rally might have come too fast. Until investors see strong evidence of a solid economic recovery, gains will likely be limited, they said.

"The market has been in consolidation," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "Oil prices and bond yields have been rising in recent weeks, and that's created a bit of profit-taking in the stock market."

But he added, "Recent signs show the economic data is starting to improve. As long as that continues, chances are the pullback we've been experiencing will be somewhat brief and lead to further equity gains in the latter half of the year."

Retailing stocks advanced Thursday after a string of companies reported July sales exceeded Wall Street's expectations, due to warm weather and significant discounting.

Wal-Mart, which reported strong sales and raised its second-quarter earnings forecast, rose $1.26 to $57.

Best Buy gained $5.81 to $46.49, while Gap rose 45 cents to $18.16. Both companies also posted better-than-anticipated July sales.

Decliners included consumer lender Americredit, which dropped $1.20 to $6.60, after issuing a 2003 profit warning.

Intel fell 15 cents to $23.99 after the Internal Revenue Service raised the chipmaker's tax liability by about $600 million following a review of the returns in 1999 and 2000.

Advancing issues outnumbered decliners 4 to 3 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, a barometer of smaller company stocks, fell 0.14, or 0.03 percent, to 453.77.

Overseas, Japan's Nikkei stock average finished Thursday down 0.6 percent. In Europe, France's CAC-40 rose 0.1 percent, Britain's FTSE 100 advanced 0.6 percent and Germany's DAX index dropped 1.3 percent.

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