MARKET REPORT
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Good earnings news and a positive trade report sent U.S. stocks soaring in
Thursday trading, the major averages more than recouping their Tuesday
losses, the Nasdaq posting its third biggest gain ever. Investors focused
on positive third-quarter results from tech bellwethers and bullish remarks
from Fed chairman Alan Greenspan.
Bargain hunters pushed small cap stocks much higher, too, with steady gains
throughout the day. The Russell 2000 Index advanced 15.10 points, or 3.2%,
to 481.31, while the S&P 600, picked up 6.47, or 3.2%, to 206.28. The
Wilshire Small Cap 1750 added 32.90, or 4.3%, to 804.69.
"I think it is safe to say, Nasdaq is finally out of the woods," said Peter
Cardillo, chief strategist and director of research at Westfalia
Investments. "I'm not sure the Dow isn't going to retest the 10,000 level
again. But I think the Nasdaq is on its way up to the end of the year."
Part of the day's strong rally was attributed to positive remarks from
Greenspan, who told a monetary conference in Washington that rising oil
prices haven't hurt the U.S. economy and that inflation is being restrained
by higher productivity created by technology investments.
Indeed, throughout the day, analysts talked up the resurgence in tech and
telecommunications stocks. In the semiconductor sector, shares moved
uniformly higher, after enduring a near 7-week slide.
The Philadelphia Semiconductor Index of large cap chip stocks vaulted
111.44, or 17.2%, to 758.74. Among small cap issues, Cymer Inc. (NASDAQ:
CYMI) matched the Philly's rise in percentage terms, gaining 3 to 21 1/4,
while Kulicke & Soffa Industries Inc. (NASDAQ: KLIC) moved ahead 19.8% to
14 3/8. Varian Semiconductor Equipment Associates Inc. (NASDAQ: VSEA),
Ultratech Stepper Inc. (NASDAQ: UTEK) and PRI Automation Inc. (NASDAQ:
PRIA) were much higher, too.
Part of the optimism was attributed to a strong after-the-bell earnings
report from bellwether Microsoft Corp. (NASDAQ: MSFT). The software giant
blew past analyst estimates by 5 cents a share. In afternoon trading,
Microsoft continued to surge, up 17.9% to $61 a share.
"There's some good and interesting things going on in the equities
markets," said Art Hogan, market strategist at Jefferies & Co. "I'd love to
put two days in a row together." He added that in the short term the market
has found a bottom.
The Dow Jones Industrial Average, where Microsoft is a component, continued
to rise, closing up 167.96, or 1.7%, to 10142.98, while the Nasdaq
Composite Index, heavily weighted with tech issues such as Microsoft,
gained a whopping 247.04 points, or 7.8%, to 3418.60. The broader S&P 500
advanced 46.63, or 3.5%, to 1388.76.
"This is clearly building on the momentum we picked up yesterday afternoon
bouncing off the lows. There are a lot of good things that look good
technically," Hogan noted.
Economic news out of Washington and Philadelphia did little to move the
markets, despite a mixed bag of news.
At 10 a.m. ET, the Philadelphia Federal Reserve said economic activity in
October for that region slipped 3.8%, confounding analysts who had
anticipated a rise of 6%. In the previous month, the regional manufacturing
index grew by 8.2%, the Philly Fed said.
Economic numbers out of Washington, however, painted a different picture.
The Commerce Department said the U.S. trade balance fell in August to $29.4
billion from a revised $31.7 billion in July. The drop surprised analysts,
who had anticipated a slight rise to $31.8 billion.
"That's good news," said Jefferies & Co.'s Hogan. "It is certainly not
getting the attention I thought it would, but unfortunately that's what
happens when you get macroeconomic news in the middle of earnings-reporting
season."
The news bodes especially well for technology companies who have the
ability to make the greatest inroads into foreign markets.
Separately, the Labor Department reported initial-unemployment claims fell
in the latest week to 307,000 from last week's revised 314,000. Analysts
had predicted a decline to 303,000.
Earnings reports were the driving force behind the market's upbeat mood. A
bevy of big names came out in force to release quarterly earnings,
including United Parcel Service Inc. (NYSE: UPS) and R.J. Reynolds Tobacco
Holdings Inc. (NYSE: RJR), who both beat Wall Street estimates. The
nation's No. 4 airline, Northwest Airlines Corp. (NASDAQ: NWAC), also beat
estimates by 8 cents a share to earn $2.06 a share in the latest quarter.
BellSouth Corp. (NYSE: BLS), however, reported earnings that fell short of
analyst expectations, although shares of cellular-phone maker Nokia Corp.
(NYSE: NOK) bettered analysts estimates, and tech issue Texas Instruments
Inc. (NYSE: TXN) met its earnings estimates.
In Canadian trading, the Toronto Stock Exchange rallied alongside U.S.
markets, topping its 10,000 level, too. The TSE rose to 10231.60, up
304.90, or 3.1%, while the Canadian Venture Exchange advanced 35.90 points,
or 1.1%, to 3289.77.
In the currency markets, the Canadian dollar advanced in afternoon trading
to US$0.6619 from US$0.6598 up over 0.3%. The euro gained slightly and
traded at US$0.8428 in 4 p.m. ET trading.
In commodities news, after climbing most of the day November crude oil
futures edged lower in afternoon trading, losing 38 cents, or 1.1%, at
$33.10. November natural gas futures continued to fall, dropping 27cents,
or 5.1%, to $4.96. December gold lost 20 cents, or 0.1%, to $272.40.
AI
