|
Nasdaq rises for 3rd day
|
 |
June 21, 2001: 5:06 p.m. ET
The promise of lower borrowing costs replaces earnings worries
By Staff Writer Jake Ulick
|
NEW YORK (CNNfn) - Investors returned to technology, financial and retail shares Thursday, betting that lower interest rates can stem the declining corporate profits that have hammered stocks this year.
The Nasdaq composite index rose for a third straight session, and the Dow Jones industrial average also gained, as the countdown to the Federal Reserve's next meeting entered the final stretch.
In the short term, the quarter ending next week will be a bleak one for earnings; hundreds of corporate pre-announcements have foretold this.
But the central bank in six days is expected to cut interest rates for a sixth time this year, moves that historically help stocks. Economically sensitive businesses such as General Motors, Home Depot, Citigroup and Alcoa all rose Thursday.
Technology shares, hit by a 15-month selloff, also gained as investors looked beyond the latest round of sales and profit warnings.
"I think there's tremendous optimism in the markets right now," Sam Ginzburg, director of global sales and trading at Gruntal & Co., told CNNfn's Street Sweep.
Economic data offered some optimism. The government said the number of Americans filing for jobless benefits fell sharply last week. And a survey of business conditions by the Philadelphia Federal Reserve showed that regional manufacturing contracted at a smaller rate in June and came in ahead of forecasts.
The Nasdaq composite index rose 27.44 points, or 1.4 percent, to close at 2,058.68, while the Dow Jones industrial average added 68.10 to end the day at 10,715.43. The Standard & Poor's 500 index advanced 13.89 to 1,237.03.
Still, the day's gains only narrowed losses on the year. The Nasdaq is down 16.7 percent in 2001 while the S&P 500 is off 6.3 percent. Only the Dow, with a 0.6 percent decline, is holding up this year.
More stocks rose than fell Thursday. On the New York Stock Exchange, advancing issues beat declining ones 1,743 to 1,356 as 1.4 billion shares changed hands. Nasdaq winners topped losers 2,053 to 1,670 as 2.1 billion shares traded.
In other markets, the dollar rose against the yen and was a little changed versus the euro. Treasury securities advanced.
A market finds positives
The Federal Reserve Wednesday is expected to cut interest rates by at least a quarter-percentage point, its sixth cut this year. Some economists expect a half-percentage point reduction, taking the Fed's benchmark lending rate to its lowest levels since early 1994.
General Motors (GM: up $3.02 to $64.82, Research, Estimates), Alcoa (AA: up $1.60 to $39.68, Research, Estimates), and Home Depot (HD: up $1.54 to $50.78, Research, Estimates), stocks that especially benefit from rate cuts, rose.
Joe LaVorgna, senior economist at Deutsche Bank, says the size of the Fed's next rate cut is too close to call.
"Whatever the Fed does on Wednesday, there's a decent chance they do something afterward," LaVorgna told CNNfn's The Money Gang, referring to the Fed's August meeting.
Brokerage Morgan Stanley's (MWD: up $5.60 to $64.95, Research, Estimates) profit fell to 82 cents a share in the latest quarter, down from $1.26 a share in the year-earlier period, but ahead of forecasts.
"Positive earnings reports combined with an absence of negative ones could be enough to get the market going," Jeffrey Benton, NYSE trader at LaBranche & Co., told CNNfn's Market Call.
Interest-rate sensitive financial stocks gained, including American Express (AXP: up $0.94 to $40.40, Research, Estimates), J.P. Morgan (JPM: up $1.52 to $47.12, Research, Estimates), and Citigroup (C: up $2.90 to $53.55, Research, Estimates).
But Transmeta (TMTA: down $7.24 to $5.36, Research, Estimates) fell 57 percent after the maker of microprocessors said revenue will decline as much as 50 percent below first-quarter levels because of weakening demand from Japan.
Exodus Communications (EXDS: down $0.66 to $1.59, Research, Estimates), a Web hosting company, warned that sales in the second quarter and full year will fall short. This has been a tough year for investors in Exodus, which began 2001 at $20.
The pace of negative pre-announcements has been steady this week as companies give advance looks at the business for the second quarter, which ends next week.
On Wednesday, Tellabs (TLAB: up $0.36 to $16.40, Research, Estimates), Infineon Technologies (IFX: up $0.07 to $25.47, Research, Estimates) and Jabil Circuit (JBL: up $1.99 to $25.85, Research, Estimates) all warned that results will miss targets.
Still, some investors are betting that the market losses already reflect the worst news about slowing profits.
"It's really time to start looking forward," Joe Kalinowski, equity strategist at Thomson Financial, told CNNfn's Street Sweep.
The slumping job market may be stabilizing, according to the latest figures. The number of Americans filling for new jobless claims fell by 34,000 to 400,000 last week.
| |
 MONEY.COM
|
|
| |
|
Columnist Michael Sivy says specialty chemical stocks are, in reality, a way to get back into the tech sector
click here
|
|
|
The four-week moving average of new claims, which smoothes out weekly fluctuations, fell by 2,750 to 422,500.
"It does seem that the rate at which layoffs are rising has slowed – and it has to slow before it can turn down," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The Philadelphia Fed index rose to negative 3.7 in June from negative 8.8 in May. More important, according to Tony Crescenzi, bond strategist at Miller Tabak & Co., is the survey's expectations component.
"Sixty-three percent of respondents said they felt conditions would get better over the next six months versus just 5 percent who said that conditions would get worse," Crescenzi said.
Thursday marked the second straight day when an economic indicator offered investors something promising. The Conference Board's May Index of Leading Indicators rose by more than twice expectations Wednesday.
The Dow's biggest loser, Boeing (BA: down $3.36 to $57.75, Research, Estimates), appeared to get a challenge from rival Airbus, which, according to a Reuters report, has become more competitive with the Seattle-based aircraft maker.
Still, Global Crossing (GX: up $0.84 to $7.76, Research, Estimates) became one of the biggest gainers on the New York Stock Exchange on news it completed its core communications network linking 27 countries and over 200 major cities. 
|
|
|
|
|
|
Track your stocks
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
