BREAKING THE CYCLE

Market gets second wind: Technology-fueled rally recovers its poise near the close; indexes hit new multi-month highs. (Alexandra Twin, September 3, 2003, CNN/Money)

The major indexes managed to close out the session Wednesday with fresh multi-month highs -- despite last-minute profit taking -- thanks to buying in technology and optimism about the economy.

Whether investors can build on those gains Thursday may depend on the slew of economic news that is due.

"I like the rally today and the volume is good, but we still have a lot of economic reports to get through the rest of the week that could either undermine it or strengthen it," said Timothy Ghriskey, president of Ghriskey Capital Partners. [...]

On Wednesday, the Nasdaq composite (up 11.42 to 1852.90) added 0.6 percent, the Dow Jones industrial average (up 45.19 to 9568.46) closed with a gain of about 0.5 percent, while the Standard & Poor's 500 (up 4.28 to 1026.27) index closed up around 0.4 percent. The Dow and S&P had only been modestly higher earlier, but the Nasdaq had traded up as much as 1.1 percent before the rally fizzled a bit.

Nonetheless, the gains were sufficient to push the indexes to new highs for the year, for the second session in a row. The Nasdaq hit a new 17-month high, closing at its highest level since April 1, 2002, when it finished the session at 1,862.62.

Both the Dow and S&P 500 ended the session at new almost 15-month highs, seeing their best closes since June 18, 2002. On that day, the Dow closed at 9,706.12 and the S&P closed at 1,037.11.

Given that the doldrums in the economy for the past few months--if not longer--have been almost purely psychological, all we need is a little contagious optimism to get the thing going again. And a series of consecutive quarters where Americans see their 401k's growing again is a recipe for a landslide in November 2004. Posted by Orrin Judd at September 3, 2003 8:00 PM