US stocks finish on a high

Blue chip stocks surged to a strong finish in the US today following upbeat economic news.

The Dow closed up 106.74, or 1.1%, at 10,129.56, its highest level in nearly 19 months while the Standard & Poor’s 500 index also reached a 19-month high, closing up 7.09.

The tech-heavy Nasdaq composite index also made gains, after earlier declines, closing up 6.03, or 0.3%, at 1,924.29.

Tech stocks struggled to advance as investors sought profits, but the Dow Jones industrial average gained more than 100 points.

Wall Street welcomed economic reports which suggested inflation was under control and better times were ahead for the battered manufacturing sector.

Analysts said investors were rotating away from riskier tech stocks and into large-cap value companies as they seek to lock in gains before the end of the year.

Recent events – such as the Dow surging past the 10,000 level and the weekend capture of fallen Iraqi leader Saddam Hussein – have also given a boost to investor confidence.

The Dow last closed higher on May 23, 2002, when it ended the day at 10,216.08.

A series of positive economic reports contributed to the rally.

The Federal Reserve reported a 0.9% rise in industrial production for November, well beyond analyst expectations.

It was the strongest reading since October 1999, and signalled that the worst may be over for the long-suffering manufacturing sector.

Separately, the Labour Department reported a 0.2% dip in its Consumer Price Index, the US government’s most closely watched inflation barometer. Economists were forecasting a tiny 0.1% advance.

Advancers today included Oracle, which closed up 42 cents at 13.12 after its quarterly earnings beat analyst expectations by a penny a share.

The high-tech bellwether’s report bodes well for others in the sector, as it suggests companies are slowly starting to increase their spending on business software.

Motorola closed up 54 cents at 13.33 after its board announced it had elected former Sun Microsystems executive Edward Zander as its new chief executive.

Zander succeeds Christopher Galvin, who is retiring after a series of clashes with the board.

Wal-Mart Stores gained 65 cents to close at 51.39 after a rough session on Monday, when it saw sharp declines after reporting December same-store sales growth was tracking at the low end of its forecast.

Aerospace and defence contractor Honeywell International was among decliners, losing 34 cents to close at 30.49 after saying pension costs would continue to pull down earnings through 2005, despite improving sales at its four business units.

Advancing issues outnumbered decliners about 3 to 2 on the NYSE. Volume was at 1.51 billion shares, compared with 1.47 billion shares traded at the same point on Monday.

The Russell 2000 index, which tracks smaller company stocks, closed up 2.49, or 0.5%, at 537.74.