Nasdaq at three-year high

The Nasdaq composite index notched up its longest winning streak in more than three years today after strong gains in factory orders and worker productivity fuelled investor expectations of a rebounding US economy.

Other market indicators also advanced, reaching heights not seen in more than a year.

Buying accelerated in the afternoon despite an unexpected rise in jobless claims. Analysts said investors remained upbeat and were willing to make additional modest bets on the market – particularly in tech stocks – even after several days of rallies.

“It’s hard to doubt the economy is just going to get stronger and stronger,” said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm. “Productivity numbers are very positive. Factory orders are picking up. Retail sales continue to be strong.”

The Nasdaq climbed 16.08, or 0.9%, to 1,868.98, for a seven-day gain of 104 points. The last time the tech-focused index notched seven straight days of gains was in February 2000.

Today’s close was also the highest level since March 19, 2002 when the Nasdaq stood at 1,880.87.

The blue chips also rose. The Dow Jones industrial average advanced 19.44, or 0.2%, to close at 9,587.90, for a five-day gain of 254 points. The blue-chip average is at its highest level since June 18, 2002.

And the Standard & Poor’s 500 index rose 1.70, or 0.2%, to 1,027.97, for an eight-day gain of nearly 35 points. The last time the index posted an eight-day winning streak was the period ended March 21. Today’s close is the highest level since June 18, 2002.

The Commerce Department reported today that US factory orders rose 1.6% in July, boosted by broad-based demand for big-ticket goods as well as nondurables such as chemicals. Analysts were expecting a more modest 0.8% gain.

Meanwhile, the Labour Department reported that US productivity – or the amount an employee produces for each hour of work – rose at an annual rate of 6.8% in the second quarter. The reading beat analysts’ expectations of a 6.4% growth rate.

But in a separate report, the department said new jobless claims jumped last week by a seasonally adjusted 15,000 to 413,000. It was the highest level since the middle of July, and also stood above 400,000, a level associated with a weak job market.

Stocks have climbed since mid-March to their highest levels in more than a year as investors grow increasingly upbeat about a resurging economy by the end of the year. But analysts caution that market gains could be limited in the weeks ahead after rising so quickly.

Procter & Gamble Co. rose 2.63 to 91.43 after the consumer-products company said it would beat earnings forecasts for the July-to-September quarter.

Cisco Systems Inc climbed 35 cents to 20.59 after Goldman Sachs upgraded the tech company’s stock rating to ”outperform” from “in-line”.

Symantec Corp gained 1.47 to 59.95 after two brokerages raised the stock rating of the maker of computer anti-virus programs.

Decliners included Pfizer Inc, which fell 28 cents to 30.60, after the pharmaceutical company lowered its 2003 earnings forecast, citing greater expenses than expected from its acquisition of Pharmacia Corp.

Advancing issues outnumbered decliners 7 to 6 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, rose 1.85, or 0.4%, to 512.56.