Primed investors pump up markets.(Business)

Investors started the new year on a hopeful note yesterday by driving stocks sharply higher.
Major indexes rose more yesterday than on any trading day in the past two months. The Dow industrials shot up by 265.89 points, or 3.2 percent, to 8,607.52.
Among broader indexes, the benchmark Standard & Poor's 500 added 29.21 points, or 3.3 percent, to close at 909.03, and the Nasdaq composite jumped by 49.34, or 3.7 percent, to end at 1,384.85.
A surprising jump in manufacturing activity played a key role in putting Wall Street in a buying mood, analysts said.
Experts also said the market was helped by the widespread belief that 2003 will be a positive year for stocks after three straight down years. Last year marked the first time in six decades that stocks fell for the third year in a row.
"I think there's a genuine interest to be bullish this year and to own more stocks than people did last year," said Anthony Forcione, an associate portfolio manager at State Street Research in Boston.
However, Forcione noted that Big Board trading remained relatively light - with about 1.2 billion shares trading hands. He said that probably reflects the fact many people haven't yet returned from holiday vacations.
"The market was primed," said Chuck Hill, director of research at Thomson First Call in Boston. "It's the start of a new year (and) a lot of people are going on the assumption that you can't have four down years in a row. Of course, they said at the beginning of last year that you can't have three down years in a row."
The Institute for Supply Management's latest manufacturing index, which jumped to 54.7 from 49.2, exceeded many economists' predictions. The index measures the health of the manufacturing industry, with scores below 50 signaling a contraction and those above 50 showing an expansion.
"It is a helpful signal," said Ned Riley, chief investment strategist for State Street Global Advisors. "The manfucturing side of our economy has been in a fairly deep slide for two and a half years now."
The report showed that new orders and production grew in December, while employment among manufacturers continued to fall.
Analysts said that it's too early to say whether the manufacturing index's jump is the sign of a trend.
"One month's number probably just implies that the bleeding has stopped," Riley said.
Edgar Peters, chief investment officer at PanAgora Asset Managment in Boston, said some of the stock declines last month were due to investors who sold stocks to get a break on their 2002 tax returns. Now many of those investors are back in the market, looking for different stocks to buy.
That selling, Peters said, helped derail a rally in stocks that began in early October.
"Most of what is going on is really tied to the tax loss selling in December," Peters said. "In a lot of areas like technology, people finally realized they weren't going to get their money back . . . What usually happens is you sell your losers and you buy other stocks in January."
Experts said stocks often benefit at the start of a new year. This year, investors appear eager to forget the corporate scandals that dominated last year's headlines.
"People do emotionally and psychologically wipe the slate clean from the year before," Riley said. "Last year, we were truly burdened with the legacy of scandals and geopolitical issues. It had much more of an impact on the market than people actually realized."
But Riley said it's far too early to say that a full-fledged stock rally has resumed.
"I don't think we've got many converts to the case that we're in a bull market," Riley said. "It isn't as if we're blasting away. We're still struggling to get back to the highs we had two months ago."