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The Market Story From:

Dow Ends Higher, but Nasdaq Eases
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By Kevin Burke

June 18, 2002 04:48 p.m. EDT

Updated from 4:12 p.m. EDT

Stocks stayed close to the flatline throughout the session Tuesday, and at the end of the day, the major averages had barely budged, even through news of another terrorist attack in the Middle East and reports offering more encouraging economic data.

The Dow Jones Industrial Average gained 18.70 points, or 0.2%, to 9706.12. The Nasdaq lost 10.52 points, or 0.7%, to 1542.77, and the S&P 500 added less than a point to 1037.11.

Word that another terrorist bombing hit the Middle East contributed to a negative tone in the first minutes of trading, but investors quickly shook it off. In the latest incident, a Palestinian suicide bomber detonated a bomb on a rush-hour bus packed with students and office workers in Jerusalem, killing 19 people and wounding more than 50 others.

Back in the U.S., the Commerce Department's Census Bureau said the number of housing starts rose 11.6% to an annualized rate of 1.733 million in May, the biggest jump in nearly seven years. The news sent homebuilding stocks higher, but did nothing to support the broader market.

Another economic report, from the Labor Department, found that the consumer price index was unchanged in May, indicating that inflation remains a nonfactor. The core rate, which excludes food and energy prices, rose 0.2%.

Several retailers reported their quarterly numbers this morning, including home furnishings retailer Pier 1 . The company reported a 77% rise in first-quarter earnings on strong same-store sales, lower inventories and cost-cutting, and the results were in line with analysts' expectations. Shares lost 4 cents to $22.06.

Elsewhere in the chain-store sector, consumer electronics merchants Best Buy and Circuit City issued their quarterly profit reports, and both beat expectations by a penny. But Best Buy did give a soft forecast for the second quarter.

Shares of Best Buy lost 8% to $39.01, and Circuit City was down 1.4% to $21.10.

Tyco International saw its shares rise 5% to $14.80 after the company filed a lawsuit against former lead counsel Mark Belnick. The lawsuit alleges that Belnick orchestrated a cover-up that included destroying vital documents, misappropriation of funds, and failing to disclose the criminal subpoena of former CEO Dennis Kozlowski.

Among technology stocks, chipmaker ESS Technology raised its second-quarter guidance, saying demand for its video products continues to exceed expectations. Shares of ESS added 5% to $18.57.

On the research front, Morgan Stanley raised its investment rating on Broadcom to overweight from equal-weight citing the stock's valuation and the belief that its fundamentals are improving. Shares of Broadcom rose 4% to $22.15.

But Morgan Stanley also trimmed its earnings forecast for IBM , saying demand for computer hardware remains soft. IBM was off 1.6% to $75.94.

Managed healthcare company UnitedHealth Group announced plans to purchase AmeriChoice for $560 million in stock, a deal that strengthens its medical services offering for Medicaid beneficiaries. UnitedHealth will use 5.5 million shares and assume $30 million in debt to complete the deal, which is expected to close some time in the fourth quarter.

U.S. Treasuries were stronger around 4 p.m. EDT. The 10-year note stood at 100 11/32, up 3/32, yielding 4.83%. Short-term notes and the long bond were also advancing.

Overseas markets were mixed. London's FTSE 100 fell 1.2% to 4702, while Germany's Xetra DAX lost 0.9% to 4434. In Asia, Japan's Nikkei 225 rose 1.7% to 10,839, and Hong Kong's Hang Seng closed up 0.2% to 10,852.









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