Wall Street shares Close modestly higher amid consolidation

NEW YORK (AFX) - Share prices closed modestly higher after a session dominated by consolidation activity during which investors reacted only slightly to a switch in the U.S. Senate's balance of political power, dealers said.

At the 4.00 pm close, the DJIA was up 14.83 points at 11,120.3.

The S&P 500 index was up 4.12 at 1,293.17 while the Nasdaq composite was up 38.45 at 2,281.93.

Volume on the NYSE was 1.1012 bln shares, with 1,684 shares closing higher, 1,562 lower and 261 unchanged.

Dealers said stocks opened with modest gains, then slipped into modestly negative territory shortly after the opening of trade, as the market assessed Vermont U.S. Senator James Jeffords' widely-expected announcement that he resigned from the Republican Party in favor of an indepedent affiliation. 

His action bestowed a slight U.S. Senate majority on the Democratic party, a development which potentially could alter the legislative environment for the telecommunications, defense, technology, pharmaceutical, 

energy and oil industries. 

However, Cantor Fitzgerald chief equities strategist Bill Meehan said that the reaction to Jeffords' announcement was muted in large part because it had been expected and was priced into yesterday's market activity.

During most of the session the major indices posted small losses as investors consolidated the market's recent sharp gains.

However, a modest burst of late-session bargain-hunting allowed the DJIA and Nasdaq composite to post relatively modest closing gains. 

Cantor Fitzgerald's Meehan said that the market remains focused on the possibility that recent Federal Open Market Committee rate cuts boost the U.S. economy, ahead of Fed chief Alan Greenspan's speech tonight before the Economics Club of New York.

Greenspan's remarks will be widely scrutinized for clues about the interest rate outlook, following news today that jobless claims in the latest week rose by 15,000 to 407,000, showing continuing serious weakness in the U.S. economy.

In the financial group, Lehman Brothers finished off its lows, closing down 30 cents at 78.85 usd, after Merrill Lynch downgraded the stock to a 'neutral' from a 'buy' rating.

Other brokerage stocks shrugged off early losses to close higher, including Goldman Sachs, which closed up 55 cents at 99.85, and Morgan Stanley, up 56 cents at 72.06 usd.

The energy sector traded actively after the announcement that Pride International, which closed down 5.15 at 27.50, and Marine Drilling, down 1.17 at 26.55, will merge to form a new company valued at approximately 6.2 bln usd.

Enron, which named Arthur Higgins president and chief executive replacing Peter Tombros, closed down 1.19 at 54.16 after investors responded negatively to the announcement.

DuPont closed down 1.62 usd at 45.77 after confirming investor concerns that the company is experiencing a "challenging" second quarter and soft North American sales.

Eastman Kodak, down 0.20 at 47.20, was marginally lower after the company reiterated it sees second-quarter EPS of 1.00-1.30 usd, compared with a First Call/Thomson Financial consensus estimate of 1.12 usd.

The defense sector was mixed, receiving special attention after Senator Jeffords' switch to independent from Republican, possibly scuttling plans for a massive arms buildup, dealers said.

Northrop Grumman closed down 2.46 usd at 86.60, after revealing details of its 2.1 bln usd hostile bid for Newport News, up 0.52 at 64.29.

The media industry continued to be in focus following reports that Echostar is getting ready to make an acquisition offer for Hughes Electronics, up 55 cents at 24.30 usd, which is currently holding talks with 

News Corp, down 70 cents at 36.53.

GM also benefited from the news, finishing up 1.41 usd at 56.59.

Ford closed down 14 cents at 25.65 usd, following news that Venezuela may ask to ban the sale of all Explorers in the country.

In the airline sector, AMR closed down 73 cents at 37.82 usd after news that it may be moving closer to a resolution of contract negotiations with its flight attendants.

Delta closed down 57 cents at 47.29 after filing with the U.S. Securities and Exchange Commission an 

pplication to sell part of its stake in Priceline.com, which finished down 14 cents at 5.11 usd.

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