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Stocks Post Modest Gains

From Times Staff and Wire Reports

Stocks shook off some midday weakness Monday to post modest gains, extending the autumn rally. Technology issues again led the advance, while health maintenance organization shares plunged on worries about 2003 earnings.

The tech-heavy Nasdaq composite index added 13.16 points, or 0.9%, to 1,481.90, the highest close since June 19.

The Dow Jones industrials rose 44.56 points, or 0.5%, to 8,849.40, the highest since Aug. 26.

Most other broad market indexes also gained, as winners outnumbered losers by 19 to 14 on the New York Stock Exchange and by 21 to 13 on Nasdaq. Trading was active.

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The market’s resilience Monday, despite midday profit-taking, suggested that many institutional investors remain eager to add to their portfolios, analysts said.

Stocks have rebounded from five-year lows reached in early October as more investors have bet on an improving economy in 2003, and as concerns about financial scandals have waned.

Still, many big investors are cautious with the threat of war between the United States and Iraq still looming.

“It’s a reasonable time to put some money in stocks, but you don’t want to jump in with both feet,” George Roche, chairman of mutual fund giant T. Rowe Price Group, told Bloomberg News.

Market bulls were cheered Monday by a report showing that sales of existing homes continued at a brisk pace in October. Strong home sales often ripple through the economy as consumers spend on furnishings and other items.

But the homes report didn’t spook the Treasury bond market. Yields have been rising lately as some investors bet that interest rates have hit bottom. On Monday the 10-year Treasury note yield edged down to 4.17% from 4.18% Friday.

Among Monday’s highlights:

* Tech shares mostly gained despite analyst downgrades of industry leaders Intel and Cisco Systems. Intel rose 43 cents to $20.48 even though research firm Sanford C. Bernstein cut the shares to “market perform” from “outperform.” The stock is up 55% since Oct. 8.

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Cisco was unchanged at $14.89 as brokerage UBS downgraded it to “hold” from “buy,” citing the stock’s valuation. Cisco now is priced at 27 times analysts’ consensus earnings estimate for the current fiscal year.

Despite the downgrades, the SOX chip-stock index rose 3.2%, helped by Intel’s announcement of price increases on certain chips. Tech winners included KLA Tencor, up $1.29 to $44.14; National Semiconductor, up 82 cents to $19.64; and Juniper Networks, up 87 cents to $9.60.

* In the Internet sector, Expedia jumped $2.36 to $77.38, and InfoSpace surged $1.55 to $11.34.

* Optimism about the economy may have helped drive General Motors shares up $1.12 to $38.70 and Ford Motor up 67 cents to $10.88. But DaimlerChrysler lost 41 cents to $34.80.

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* Nike rose 82 cents to $44.57. The athletic apparel firm raised its quarterly dividend 17%, to 14 cents a share from 12 cents.

* HMO stocks were broadly lower. A survey of 400 employers by research firm SG Cowen found that many are resisting health-care premium increases, raising concerns about HMO earnings in 2003.

UnitedHealth Group tumbled $8.17 to $76.45, Wellpoint Health dropped $7.25 to $62.49 and Aetna slid $4.39 to $35.75.

* Among Southland issues, Glacier Water soared $3.10 to $17.30. The company Friday offered to exchange 1.15 million of its common shares for shares of a preferred stock.

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Market Roundup, C6-8


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