NEW YORK (CNNfn) - The Nasdaq composite index broke a three-session losing streak Monday, rising more than 100 points, as investors snapped up technology stocks hammered by a two-week sell-off.
Telecommunications stocks such as WorldCom and Ericsson, hit hard recently on earnings concerns, drew buyers. Gains to J.P. Morgan and Intel, whose shares split Monday, lifted the Dow Jones industrial average slightly despite a big tumble in Wal-Mart stock.
"I think it (the sell-off) was very overdone," Grace Fey, portfolio manager at Frontier Capital Management, told CNNfn's market coverage. "For some of these companies, the fundamentals remain very strong."
Investors agreed. Earnings warnings and interest rate fears pressured stocks last week. But with no news to exacerbate those concerns Monday, money chased stocks that had fallen to some of their lowest levels of the summer.
 The Nasdaq jumped 103.99 points, or 2.8 percent, to 3,766.99. The gains took back a fraction of last week's 10.5 percent tumble, the index's worst weekly performance since April.
The Dow rose 10.81 to 10,521.98, and the S&P 500 gained 10.94 to 1,430.83.
Despite the day's rebound, Kenneth Sheinberg, head of New York Stock Exchange trading at S.G. Cowen, sees any rally limited by uncertainty over the strength of the economy and the direction of interest rates.
"I can't see the market doing anything dramatic without those questions being cleared up," Sheinberg said.
Direction could come later this week when with a string of economic indicators on housing, manufacturing and employment cross the wires. The figures, depending on their strength, could give Federal Reserve inflation fighters reason to boost or hold borrowing costs steady in August.
 More stocks rose than fell Monday. Advancing issues on the New York Stock Exchange topped declining ones 1,712 to 1,160, on trading volume of more than 928 million shares. Nasdaq winners beat losers 2,310 to 1,756, as more than 1.4 billion shares changed hands.
In other markets, Treasury securities held steady. After surging last week, the dollar edged lower against the euro and yen.
Stocks on sale
The day's gains follow the Nasdaq's second-worst week of the year, which came on fears that interest rates would go higher and corporate profit growth could stall. Analysts caution that those concerns have not been wrung from a market still building a consensus on what the Fed will do next month.
"If the Fed is committed to slowing the economy, then I do think demand for technology will slow," Ned Riley, chief market strategist at State Street Global Advisors, told CNN's Street Sweep.
 At the same time, Wall Street is also struggling with how to value stocks amid projections of a slowdown in earnings gains. The Fed, the nation's central bank raised borrowing costs six time sine June, 1999 in an effort to keep rising inflation from derailing a record economic expansion. But stock investors fret that higher rates will crimp corporate earnings.
Still, analysts Monday say recent market losses were overdone. In a note to clients titled "Stock market: Looking attractive," Ed Kerschner, chairman of PaineWebber's investment policy committee, said S&P 500 stocks are "getting cheap."
"Current levels would be viewed as a buying opportunity," Kerschner wrote.
Other agreed. WorldCom (WCOM: Research, Estimates), battered last week, jumped 2-1/2 to 19-1/16. Ericsson (ERICY: Research, Estimates), another recent casualty, gained 1-1/2 to 19-5/8.
And Qualcomm (QCOM: Research, Estimates) rose 2-1/2 to 64-15/16 after announcing a joint venture with Ford to deliver wireless services to automobiles. Ford (F: Research, Estimates) rose 7/16 to 46-9/16.
Intel (INTC: Research, Estimates) rose 2-3/16 to 66-3/4. Shares of the world's biggest chip maker began trading on the basis of a 2-for-1 split Monday. J.P. Morgan (JPM: Research, Estimates), another casualty from last week, surged 3-1/16 to 133-1/2, becoming the Dow's biggest gainer. But Wal-Mart (WMT: Research, Estimates), which fell 3-7/16 to 55-1/4.
Merger Monday
Deal announcements lifted some stocks. Among them, NCS (NLCS: Research, Estimates) surged 13-3/4 to 71-7/8 after U.K. media firm Pearson PLC said Monday it plans to buy the U.S. education services company for $2.5 billion.
But an electric utility industry merger was poorly received. Shares of FPL Group Inc., the parent of Florida Power & Light Co., and Entergy Corp. fell after they said Monday they plan to merge in a $7 billion stock swap.
FPL (FPL: Research, Estimates) fell 4-9/16 to 48-1/4 and Entergy (ETR: Research, Estimates) shed 3-5/16 to 27. The deal would create the largest power producer in the United States.
Following two weeks with hundreds of profit reports, the pace of quarterly reports for the April-June period slows this week. Among companies posting results Monday, Union Carbide (UK: Research, Estimates) earned 86 cents a share, compared with a First Call estimate of 85 cents. Union Carbide, which expects its purchase by Dow Chemical to be completed during this quarter, rose 5/8 to 44-13/16.
 (Click here for a comprehensive look at the day's financial results.)
The week's first economic indicator had no apparent market effect. The Chicago Purchasing Managers' Index fell to 52.0 in July, down from 56.8 in June, in a development that suggests manufacturing is cooling. But at the same time, the Chicago business barometer's prices-paid component, an inflation gauge, jumped to 70.0 in July from 63.6 in June.
Wall Street could pay closer attention to more important economic indicators coming out later this week. Among them, Tuesday's National Association of Purchasing Management index and Friday's employment data for July.
Bryan Piskorowski, market analyst at Prudential Securities, told CNNfn's market coverage that there are two factors affecting the markets this week: the slew of economic data, and the fact that many tech stocks have been beaten down. (334K WAV) (334K AIFF) 
|
