Wall Street greeted the first trading day of 2003 with a triple-digit rally.
When the stock market closed on the Tuesday, December 31, 2002, it marked the end of the first three-year losing streak since the period between 1939 and 1941. So Wednesday's news that the Dow Jones Industrial Average closed at 8,607, up 265 points, is triggering many smiles on Wall Street.
Analysts say the rally can be attributed to good news in manufacturing. After three months of steady decline, the index of manufacturing business conditions reached 54.7 in December, up from 49.2 in November.
Norbert Ore, the Chairman of the Institute for Supply Management, which compiles the index, says the news bodes well for the New Year.
"I think it is an indication that, for the first part of the year, we will see our index above 50, and I think the most encouraging thing is that manufacturing sector is a leading indicator, so the balance of the economy should start to pick up, too," he said. Mr. Ore says many of the gains in manufacturing occurred in the technology sector, which has struggled disproportionately over the last year.
In the manufacturing index, 50 marks the threshold between growth and contraction. The nearly five-point move into growth territory shattered the expectations of market analysts, who foresaw an index of no more than 50.
Some analysts, however, are not ready to celebrate. Andrew Schwarz, of the market analysis firm AGS Specialist Partners, is concerned that the rally is simply the so-called January effect in action.
"If you historically look at the first few days of trading every year: Last year was an up year for the first few days," he said. "The year before we had the first few days in positive territory, but both years led to big disappointments."
Even so, Mr. Schwarz says he's impressed with the market's resilience in the face of several mitigating factors such as high oil prices, high gold prices, a weak dollar, and war brewing in different parts of the world.