By Amy Higgins
The Cincinnati Enquirer
The new year started off strong on Wall Street, with the Dow Jones Industrial Average Thursday having its largest gain since October.
News about stronger-than-expected manufacturing output in December sent the blue-chip average up 265.89 points, or 3.2 percent, to 8607.52.
"The market had been in a really dour mood," said Declan O'Sullivan, managing director of RiverPoint Capital Management. "This gets us off to a really good start."
The Dow claimed its biggest one-day gain since Oct. 15, when it rose 378.28. The rally came on the heels of the Dow having lost 16.8 percent in 2002 and 27.5 percent from 2000-2002.
The broader market was also sharply higher. The Nasdaq Composite Index rose 49.34, or 3.7 percent, to 1384.85 after falling 31.5 percent last year and 66.9 percent over the past three years. The last time the Nasdaq had a bigger one-session gain was Oct. 15, when it climbed 61.91.
The Standard & Poor's 500 Index advanced 29.21, or 3.3 percent, to 909.03, following last year's loss of 23.4 percent and a three-year drop of 40.1 percent. The last time the S&P had a stronger finish was Oct. 15, when it rose 39.83.
Greater Cincinnati stocks also benefited, with 70 of the stocks of local interest gaining, five falling and five unchanged. The Enquirer 80 index gained 5.05 points, or 2.8 percent, to 187.22.
The market was cheered by news that U.S. manufacturing activity grew in December for the first time in four months. The Institute for Supply Management said its index of business activity rose to 54.7 in December from the 49.2 in November. A reading above 50 indicates the manufacturing sector is growing, while a reading below 50 signals contraction in the sector.
Analysts had forecast a reading of 50.1 for the month. The last time the index was above 50 was in August.
"This was really unanticipated," Mr. O'Sullivan said.
Thursday's advance was embraced by investors disappointed that Wall Street had forfeited the so-called Santa Claus rally. Recent worries about rising oil prices thwarted the usual year-end advance.
But analysts were wary of reading too much into one day of trading, which was light due to the winter holidays, and one economic report, the first of 2003.
"It is only one data point. It is the first day of the new year. It is not going to tell us where we are going forward. It is one piece of the puzzle but certainly not the whole picture," said Mark Donahoe, managing director at US Bancorp Piper Jaffray in Minneapolis.
Mr. O'Sullivan was more optimistic, predicting a positive 2003.
"Conditions are good," he said. "Profits should be fairly decent this year."
The Associated Press contributed to this report.
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