US investors overcome terrorism jitters

Investors struggled past concerns over a potential terror strike on New York targets, including Wall Street, today, sending stocks modestly higher.

The move followed an upbeat earnings report from Procter & Gamble and a positive report on manufacturing activity.

Financial stocks were under pressure following warnings from the US government over the weekend that financial institutions including the New York Stock Exchange, Citigroup, Prudential Financial and the World Bank could be targeted by terrorists.

But after spending much of the day in a slump, major market indicators ended modestly higher following a late round of buying, repeating a pattern now familiar from recent trading sessions.

The Dow Jones industrial average closed up 39.45, or 0.4%, at 10,179.16. It was the Dow’s fifth straight advance, its longest rally of the year and the first time since late November-early December that it put together five consecutive winning sessions.

Other market indicators were mixed. The Standard & Poor’s 50 index rose 4.90 or 0.4% to 1,106.62 and the Nasdaq composite index was up 4.73 or 0.3% at 1,892.09.

Financial institutions in New York and Washington, including the NYSE and the Citigroup headquarters building, were under extra scrutiny after the government gave an unusually detailed warning of possible terrorist attacks against them.

Police officers armed with assault weapons patrolled the pavements outside the NYSE in Manhattan’s financial district as well as the Citigroup headquarters building.

In a bid to reassure investors, New York Mayor Michael Bloomberg and Governor George Pataki rang the opening bell on the NYSE and urged the financial community to go about its business.

Sam Stovall, chief investment strategist at Standard & Poor’s, said concerns about terrorism, along with high oil prices and uncertainty about the US economy, have been part of what investors are calling Wall Street’s “wall of worry”.

“And it’s not just everyday terrorism concerns. It’s linked to the conventions, the Olympics,” Stovall said. ”How do you factor in an unknown event?”

Even amid the new terror concerns, a strong earnings report from leading consumer products maker Procter & Gamble helped provide an underpinning for enthusiasm on the market. P&G was up 1.19 at 53.34 after reporting that its earnings surged 44% in its fiscal fourth quarter.

The market also digested two economic reports out this morning, a surprise 0.3% decline in construction spending in June, and a July manufacturing survey from the Institute for Supply Management that, while upbeat overall, signalled declines in its measures of employment and prices.

Worries over the terror threat as well as the lacklustre elements of the manufacturing report bolstered Treasury bonds today. Oil prices were also higher.

Financial stocks were somewhat lower amid the threat of terrorism against financial institutions.

Prudential, whose Newark, New Jersey, building was cited as a possible target, was down 46 cents at 46.10. But shares in Citigroup were up 23 cents at 44.32 after being lower earlier.

Even in its early losses, the market showed signs of strength. Susan Malley, chief investment officer for Malley Associates Capital Management, said the terrorist warning dampened trading and kept volume light, but did not spark a flight from stocks.

“Terrorism was on the back burner, and it was economics that was driving the market, but the political conventions drew peoples’ attention to the possibility of some kind of terrorist action,” Malley said. “I’m interpreting this as a reluctance to put money in the market rather than a reason to take money out of the market.”

Cox Communications, the US’s fourth-largest cable TV provider, soared 5.58 or 20% to 33.16 after its Atlanta-based parent company Cox Enterprises announced a 7.9 billion proposal to buy all outstanding shares and take the company private.

Shares in other cable companies also rose. Industry leader Comcast Corp. was up 1.17 at 27.97, and Cablevision Systems surged 1.87 to 19.34.

Advancing issues outnumbered decliners 3 to 2 on the New York Stock Exchange, where volume totalled 945 million shares, about even with Friday’s pace.

The Russell 2000 index of smaller companies edged up 0.64 or 0.1% at 551.93.