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Tentative gains on Wall St.
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September 25, 2001: 5:13 p.m. ET
Positive brokerage, corporate comments outweighs economic worries
By Staff Writer Alexandra Twin
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NEW YORK (CNNfn) - Wobbly U.S. equity indexes struggled against economic pessimism Tuesday to close modestly higher as investors pushed to sustain momentum after Monday's rally, the first since terrorist attacks against the nation two weeks earlier.
Weak consumer sentiment numbers and concerns about imminent military action kept investors on their toes throughout a tumultuous day that saw indexes close below their highs, but still in the black.
"I would regard today as positive, although we're clearly not out of the woods yet," Sam Stovall, Senior Investment Strategist, Standard & Poor's, told CNNfn's Street Sweep.
The Dow Jones industrial average rose 56.11 to 8,659.97, while the Nasdaq composite index rose 2.24 to 1,501.64. The Standard & Poor's 500 index rose 8.82 to close at 1,012.27.
"Yesterday (Monday) was a technical rally," said Michael Carty, principal at New Millennium Advisors. "There's still a lot of uncertainty about a potential recession and about what's going to happen on the diplomatic front."
One contributing factor to the economic uncertainty was talk of a possible $100 billion stimulus package before a closed Senate Finance Committee hearing. The leaders of the panel said Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Robert Rubin discussed the possibility of the package, although they added it is too early to know if such a stimulus is needed.
"There's going to be no true market direction until the earnings picture and military actions become clearer," said Tim Heekin, head of stock trading at Thomas Weisel Partners.
Market breadth leaned toward the positive. On the Nasdaq, decliners and advancers were evenly split as 2.14 billion shares changed hands. On the New York Stock Exchange, winners topped losers by an 8-to-7 edge as 1.58 billion shares changed hands.
European stocks ended their day with gains. Asian markets finished mixed, with Tokyo's Nikkei index holding on to a 1.5 percent advance. Treasury prices were higher. The dollar was weaker against the euro but climbed modestly against the yen.
Confidence erodes
A report showing much weaker-than-expected economic data initially failed to stir the markets.
Consumer confidence in September tumbled to 97.6 from August's revised 114, according to a Conference Board survey reflecting research from both before and after the Sept. 11 terrorist attacks. It was the largest drop in the indicator since 1990.
More positively, the National Association of Realtors' reading on August existing home sales rose 5.8 percent to an annual rate of 5.5 million, topping estimates.
In other economic news, retail sales recovered last week from the sharp drop immediately following the terrorist attacks but still were below the previous week, according to an industry report. The latest Redbook survey showed chain-store sales fell 2.2 percent the first three weeks of September compared with August
Chip stocks were mixed to lower. Advanced Micro Devices (AMD: down $0.76 to $9.05, Research, Estimates) said it will cut 2,300 jobs, or 15 percent of its work force, and close two fabrication plants.
Chipmaker Micron Technology (MU: down $1.06 to $21.24, Research, Estimates) dipped ahead of its fiscal fourth-quarter results, due out after the close of trade. Analysts expect the company to have lost 33 cents a share versus earning $1.16 a share in the year-ago period.
Bear Stearns reversed direction on the semiconductor industry, looking for a 32 percent decline in 2001 rather than the previously expected 19 percent growth. The firm, which projected no change in 2002 revenue rather than the previously expected 15 percent gain, said the sector still is a good place to be for the long term.
Most of the firm's picks were down, including Xilinx (XLNX: down $1.32 to $24.89, Research, Estimates) and Altera (ALTR: down $0.77 to $18.52, Research, Estimates). Applied Micro Circuits (AMCC: down $0.66 to $7.62, Research, Estimates) also fell.
But chipmaker ASML Holding (ASML: up $0.91 to $12.18, Research, Estimates) rose on an update from Deutsche Banc Alex. Brown.
Industry experts said that they expect auto sales to slide between 15 percent and 20 percent in September to their weakest rate so far this year, according to Reuters. Automakers Ford Motor Co. (F: down $0.31 to $16.12, Research, Estimates), DaimlerChrysler (DCX: down $0.87 to $28.53, Research, Estimates), and General Motors Corp. (GM: down $1.87 to $41.36, Research, Estimates) were down.
General Motors also said it would take a $300 million pre-tax charge on plant closure in the third quarter as it discontinues the Chevrolet Camaro and Pontiac Firebird.
U.S. regulators charged Dow component drug company Merck (MRK: down $1.54 to $62.45, Research, Estimates) with misleading doctors about its blockbuster painkiller Vioxx with promotions that downplayed a possible risk of heart attacks.
Drugmaker Bristol-Myers Squibb (BMY: up $1.62 to $52.12, Research, Estimates) said it will refile its new drug application for its hypertension drug by the end of 2001 and that it will sell $5 billion in bonds, as opposed to the previously announced $4 billion.
GlaxoSmithKline (GSK: up $1.16 to $52.51, Research, Estimates) is being considered as the potential marketer of Bayer's anti-impotency drug.
Dow component Pfizer (PFE: up $0.95 to $36.98, Research, Estimates) also rose.
One positive development came from soft drink maker Coca-Cola (KO: down $0.03 to $48.00, Research, Estimates), a Dow Jones industrial average component, which said it will meet earnings targets for the current year despite a business slowdown.
Some retailers advanced, strengthening the Dow. Dow component Wal-Mart Stores (WMT: up $1.12 to $48.40, Research, Estimates), the world's largest retailer, was raised to "strong buy" from "buy" by UBS Warburg, and the price target increased to $58 from $50.
Retailer Sears Roebuck (S: up $0.57 to $34.55, Research, Estimates), a former Dow issue, was raised to "buy" from "hold" by Credit Suisse First Boston.
Defense stocks continued to show strength on expectations of increased productivity hand-in-hand with military action. Raytheon (RTN: up $0.80 to $32.90, Research, Estimates) and Boeing (BA: up $1.53 to $34.33, Research, Estimates) rose.
Boeing CEO Phil Condit said that the aerospace company should still be able to show some growth in 2002, despite a reduction in orders.
AOL Time Warner (AOL: up $0.30 to $32.80, Research, Estimates), the parent company of CNNfn.com, said late Monday that its 2001 earnings before bookkeeping items would grow by 20 percent, falling short of the 31 percent previously forecast.
Flat panel display products maker Kopin (KOPN: up $1.72 to $10.65, Research, Estimates) said third-quarter results should top estimates amid higher demand. The company said growth should spread into the fourth quarter.
Brokerage comments gave a boost to the severely depleted airline sector. Goldman Sachs issued a note saying the recent selloffs in regional airlines was oversold, upgrading Sky West (SKYW: up $0.75 to $15.40, Research, Estimates) and reiterating its rating on Atlantic Coast Airlines (ACAI: down $0.60 to $12.85, Research, Estimates). Deutsche Bank Alex. Brown upgraded its rating on AMR (AMR: up $0.34 to $18.64, Research, Estimates).
Web address provider VeriSign (VRSN: up $2.36 to $42.22, Research, Estimates) rose after the company said it had made a deal with Rediff.com (REDF: down $0.18 to $0.72, Research, Estimates), one of India's largest Internet portals.
Brokerage house Lehman Brothers Holdings (LEH: up $0.85 to $52.40, Research, Estimates) reported a sharp drop in its fiscal third-quarter profit that nonetheless beat estimates.
Charter Communications (CHTR: down $0.59 to $12.22, Research, Estimates) was downgraded by Banc of America Securities one day after its CEO resigned.
Exodus Communications (EXDS: down $0.33 to $0.17, Research, Estimates) was the Nasdaq's most active stock, losing half of its value after a published report said the battered Web hosting company was planning to file for bankruptcy. 
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