The stock market seems to believe that...

The stock market seems to believe that the recession and the war both will be short-lived, and that a victory in the Middle East could cause an upturn in the economy, said Irving Katz, an independent stock analyst in San Diego.

The Federal Reserve board added to the market euphoria by dropping its discount rate to 6%, which prompted major banks to lower their prime rates to 9%. The Veterans Administration followed suit by lowering mortgage rates to 9%.

“The major stock averages are now at their highest levels in six months, and San Diego stocks in most cases have managed to join this massive rally,” Katz said.

Gensia Pharmaceuticals gained $2.125 this past week, reaching a new high of $13 as investors seemed to fall over themselves to invest in potential growth. Immune Response, which was selling near its low, gained $2.50 to $5.75.

HomeFed Bank gained $2.125 on the week on the possibility of lower interest rates and new accounting rules for banks that might later affect S&Ls;, Katz said.

Maxwell Laboratories gained $2.50 as the new budget presented by President Bush included dollars for Strategic Defense Initiative. “Maxwell would benefit from any increase in Star Wars spending,” Katz said.

The only stocks that moved down last week were those affected by adverse news.

San Diego Gas & Electric fell $1.75 as its merger with Southern California Edison received a major setback. Two administrative law judges said the merger would be beneficial to ratepayers but anti-competitive.