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Markets & Stocks
Nasdaq rockets almost 8%
October 13, 2000: 5:19 p.m. ET

Strange but true: Wall Street exhibits rare rally as money chases cheap stocks
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - U.S. stocks surged Friday for the first time in seven sessions as bargain-hunting investors snapped up shares hammered by a six-week sell-off.

The Nasdaq composite index, pummeled this fall on profit concerns, posted its second-biggest gain on record, one day after closing at its lowest level of the year.

And the Dow Jones industrial average reversed almost half its losses from the previous session, when blue chips suffered their fifth-biggest point loss in history.

graphic"Stocks kind of went on sale," Brian Finnerty, head of Nasdaq trading at C.E. Unterberg Towbin, told CNN's Street Sweep.

PMC Sierra, Gateway and Juniper Networks all posted strong financial results, lifting a market that is still negative for the year.

Oracle, off 21 percent since the end of August, gained, as did J.P. Morgan, down 15 percent in the same period. Home Depot, which lost nearly a third of its value on an earnings warning Thursday, drew buyers. Yahoo! broke a two-session plunge.

"We would characterize today's rally in the tech sector as an oversold bounce," Clark Yingst, market analyst at Prudential Securities, told CNNfn's In the Money.

Still, several Internet stocks, which have declined dramatically since last spring, continued to bleed. After losing 75 percent of their value during the past six months, DoubleClick and CMGI fell again Friday.

At the same time, the market clung to positives. Oil prices -- whose advances spooked the market Thursday -- edged lower, easing some fears that rising inflation will slow the economy. And Abby Joseph Cohen, the influential Goldman Sachs strategist, issued a bullish market outlook.

graphicThe Nasdaq rose 242.09 points, or 7.87 percent, to 3,316.77, but is 18.5 percent lower on the year. Still, the gains were second only to the Nasdaq's record 7.94 percent surge on May 30.

The Dow gained 157.60, or 1.6 percent, to 10,192.18, narrowing its 2000 losses to 11 percent.

And the S&P 500 added 44.39, or 3.3 percent, to 1,374.17 and is off 7 percent on the year.

More news from CNNfn.com for investors:

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More stocks rose than fell. Advancing issues on the New York Stock Exchange topped declining ones 1,619 to 1,260, on trading volume of 1.2 billion shares. Nasdaq winners beat losers 2,698 to 1,339, as more than 2 billion shares changed hands.

In other markets, Treasury securities, which rallied Thursday, edged lower. The dollar rose against the euro and was little changed versus the yen.

Finally, some buying


On the Nasdaq, software maker Oracle (ORCL: Research, Estimates) jumped $4.13 to $35.63. Dow investment bank J.P. Morgan (JPM: Research, Estimates) advanced $7.13 to $143.13.

Lifting both indexes, Intel (INTC: Research, Estimates) gained $3.25 to $40.38.

graphicExplaining the broad gains, some analysts said stocks had become too cheap to ignore. Intel, for example, which rose as high as $75 earlier this year, had lost 49 percent of its value by Thursday to trade at a price-to-earnings ratio of 20.

"There's an old saying that out of chaos comes opportunity," Ned Riley, chief investment strategist at State Street Global Advisors, told CNNfn's Market Call. (278K WAV) (278K AIFF).

Both Riley and Prudential's Yingst still said the major indexes could retest lower levels again before rising.

At the same time, a series of corporate profit reports late Thursday showed strength, buoying a market worried about earnings slowdowns.

Juniper Networks (JNPR: Research, Estimates) gained $28.91 to $228.50 after nearly doubling analysts' third-quarter profit forecasts with earnings of $60.3 million, or 17 cents a share.

PMC-Sierra (PMCS: Research, Estimates) rose $32 to $190.14 after saying third-quarter profit rose to 31 cents per share, well above the 13-cents-per-share profit in last year's third quarter.

And Gateway (GTW: Research, Estimates) advanced $9.48 to $53.11. The computer maker turned in a third-quarter profit of 46 cents per share, solidly higher than the 35 cents per share a year-earlier.

So far, 10 percent of the companies in the S&P 500 have reported third-quarter results, and 72 percent of them have beat expectations, according to First Call.

Some of hardest-hit stocks showed signs of life Friday. Among them, Home Depot (HD: Research, Estimates), which Thursday became the Dow's biggest loser after readying Wall Street for a weaker-than-expected profit, gained $1.43 to $36.31. Yahoo! (YHOO: Research, Estimates), which tumbled over the last two sessions, gained $3.38 cents to $60.

Goldman Sachs strategist Abby Joseph Cohen may have helped the markets. Cohen reiterated her year-end target for the S&P 500 at 1,575, a 15 percent premium above Friday's levels.

And oil prices, which surged to near a 10-year high Thursday after violence escalated in the Middle East, edged lower. Crude futures for December delivery slipped $1.59 in New York to $34.10 a barrel. 

Still, not all recent financial news was positive. DoubleClick (DCLK: Research, Estimates) tumbled $5.69, or 31 percent, to $12.44 after details of its third-quarter earnings report revealed slower growth. A series of brokerage downgrades followed. And CMGI (CMGI: Research, Estimates), the Internet investment firm, fell 53 cents to $17.38.

Union Carbide (UK: Research, Estimates), meanwhile, said third-quarter profit should come in at about 20 cents a share, down from the 36 cents a share it made a year earlier and below the analysts' forecasts of 57 cents a share.

Union Carbide, which blamed the warnings on higher raw material and energy costs coupled with lower prices for some of its products, fell $1.75 to $34.81.

PPI, sales rise


Consumer spending and producer prices surged, according to the latest economic figures, decreasing the odds of a Federal Reserve interest rate cut any time soon.

The Producer Price Index jumped 0.9 percent last month, the Labor Department said, nearly double expectations. Separately, the Commerce Department reported retail sales rose 0.9 percent last month, above the 0.6 percent forecasts.

The stock market is looking for any signs that the Fed, after raising interest rates six times since the summer of 1999, is going to ease borrowing costs.

graphicWhile some analysts predict an easing ahead, few are ready to say precisely when credit will loosen.

Friday marked the six straight week of losses on Wall Street. The Dow shed 3.9 percent on the week while Nasdaq is off 2.3 percent over the last five days. The S&P 500 lost 2.7 percent.

But if it wasn't for Friday's rally, the weekly declines would have looked much worse. Charles Lemonides, senior portfolio manager at M&R Capital, said the session's gains appear to based more on psychology than fundamentals. And psychology is tough to predict.

(Psychology) "is something that can turn very quickly," Lemonides told CNN's Street Sweep. Back to top

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.