WALL STREET Investors hope for milestones in markets

Job growth shows the economy is picking up, analysts said.
LOS ANGELES TIMES
As the U.S. economy continues to improve and the stock market grinds higher in response, investors might have two new reasons to celebrate this week: Dow 10,000 and Nasdaq 2,000.
Neither of those market milestones has been seen in more than a year, but both could be on the brink of being eclipsed, analysts say.
Despite a weak market response Friday to the government's robust report on October employment trends, most major stock indexes gained ground last week for the sixth time in seven weeks.
The Dow Jones industrial average rose 0.9 percent for the week to end at 9,809.79, though it dipped 47.18 points Friday.
The technology-dominated Nasdaq composite index also eased Friday but was up 2 percent to 1,970.74 for the week.
Given three straight months of job growth, market pros say the economy is finally starting to hum, easing the lingering doubts of skittish investors and providing more justification for the huge rebound in share prices since March.
"These economic numbers are nothing short of phenomenal," said Philip Orlando, manager of the Federated Large Cap Growth Fund in New York, noting that a net 126,000 nonfarm jobs were added in October, soundly beating analysts' expectations.
What's more, payroll figures for the previous two months were revised sharply upward by the Labor Department.
Optimism
"You've got to conclude that we're heading in the right direction," Orlando said. Wages and hours worked also have been on the upswing in recent months, giving Americans more purchasing power, he said.
Friday's news "couldn't have come at a better time," said Mat Johnson, chief economist at Quantit Economic Group, a research firm in Sausalito, Calif. The economy has gotten about as much mileage as possible from the wave of mortgage refinancings in recent years, the summer tax rebates and deep discounting by carmakers and other retailers, he said.
Hiring had been the missing link in the recovery. If job growth is sustained, it would give Wall Street more confidence in the 2004 economy and thus in corporate earnings growth that underpins stocks.
Although the market yawned at the employment data Friday, analysts noted that stocks had rallied strongly early in the week and in the previous week.
Many analysts believe Dow 10,000 and Nasdaq 2,000 will be breached soon, given that November and December typically are strong months for stocks.
"If we keep getting good news on the economy, that augurs well for corporate earnings, and the stock market will continue to grind higher, though not at anywhere near the pace of the last six to seven months," Orlando said.
Surges
From prewar lows on March 11, the Nasdaq index has jumped 55 percent and the Dow industrials have surged 30 percent.
At 1,053.21 as of Friday, the blue-chip Standard & amp; Poor's 500 index has soared 32 percent in the same span.
Stuart Freeman, chief equity strategist at brokerage A.G. Edwards & amp; Sons in St. Louis, expects the S & amp;P 500 to reach 1,100 by Dec. 31 and 1,200 by the end of 2004. That would mean a gain of 4 percent-plus through year-end, and an additional 9 percent next year.