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Today's Market Update with...

Harvey Katz, Value Line's Managing Editor

November 03, 2009 - 8:37 AM ET

The bulls held the line yesterday, refusing to succumb to further bearish action following last Friday's reversal that saw the Dow Jones Industrial Average lose 250 points on concerns about the health of the business expansion.

Yesterday, by comparison, the market generated an early sharp gain on better-than-expected news on manufacturing activity and pending home sales. Then, the bulls proceeded to give all of the gains--which had reached 140 points in the Dow Jones Industrial Average--back, before rallying anew to end the session with a 77-point gain in the Dow and a four-point uptick in the NASDAQ.

Meanwhile, investors appear uneasy about the pace of economic activity going forward. True, the third quarter was a dazzler, with the nation's gross domestic product rising 3.5%. However, more recent news is less upbeat, with retail sales, new home sales, and consumer confidence all showing some softness. Thus, yesterday's solid showing in manufacturing was a welcome development. That said, we think growth will decelerate in the current quarter, with GDP perhaps gaining a less compelling, 2%, or so.

As for the market, sharp reversals in Europe this morning have helped to send our own futures lower, presaging a modestly softer opening when trading gets going in less than an hour from now.

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