Wall Street: Weds mid-session

THE technology-focused Nasdaq Composite Index hit the 2,000 mark at midday for the first time since January 2002, as stocks continued their upward surge after hitting their 2003 lows in mid-March.

The Nasdaq was up 11.3 points, or 0.57%, at 1,991.43, moments after breaking through the psychologically significant 2,000 level. The Dow Jones industrial average was up 76 points, or 0.77 percent, at 9,929.

A solid forecast from microchip maker Xilinx and anticipation that computer chip giant Intel could release a positive trading update later this week were fuelling investors' appetite for technology shares, traders said.

The Dow was boosted by a positive outlook from drugs giant Merck, which said it expects earnings to rise at a single-digit percentage rate in 2004 after a decline this year.

A surprisingly weak report on the services sector took some of the wind out of the market's momentum, but overall sentiment remained largely intact.

General Motors was another big blue-chip gainer, rising nearly 5% to $45.31. Goldman Sachs said in a research note that the automaker's pension plan is recovering, which could bolster 2004 earnings.

In the latest economic data, a report showed the vast US services sector expanded robustly in November, although growth slowed even as companies took on more workers.

The Institute for Supply Management's non-manufacturing index eased to 60.1 last month from 64.7 in October, which exceeded Wall Street forecasts for a more modest dip to 64.3.

Before the opening, the government said productivity of US businesses climbed at its fastest pace in 20 years in the third quarter, rising a revised 9.4% annual rate. Unit labour costs over the period fell 5.8%.