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Bulls trounce Wall Street
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June 2, 2000: 5:29 p.m. ET
Investor optimism rekindled by jobs data; Nasdaq, Dow surge higher
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - Wall Street celebrated Main Street's misery Friday, after a key labor report showing slower-than-expected job growth sparked a searing rally that sent the Nasdaq composite index to its highest close in a month.
The May unemployment report, which showed the first decline in hiring by U.S. companies in more than four years, would normally be seen as bad news.
But in the current surging economy, where investors are nervous that the Federal Reserve will continue to raise interest rates to slow things down, the data prompted investors to snap up stocks at the open and never look back.
The Nasdaq rallied more than 6 percent, led by tech buying. Financial stocks helped push the Dow up more than 1 percent.
"Wall Street breathed a collective sigh of relief this week as fears of mounting inflationary pressures and additional rate hikes by the Federal Reserve suddenly evaporated," wrote Lynn Reaser, chief economist at Banc of America Capital Management, in a note to clients.
The catalysts were clear. Reports showed that employment, the housing market and leading economic indicators all slowed. Manufacturing and construction spending also ebbed.
 For the week, the Nasdaq gained 19 percent to 3,813.38, reducing its total decline so far this year to only 6.3 percent.
Meanwhile, the Dow jumped 5 percent to 10,794.76, bringing its decline this year to 6.1 percent. The broader S&P 500 finished the week at 1,477.26.
"The market was ripe to rally and obviously it had some attractive news that the economy is slowing down which sparked the rally," said Joseph Barthel, chief investment strategist at Fahnestock & Co.
 Market breadth was firmly positive, and the pace of activity seemed to strengthen from the recent lackluster volume levels. Advancing issues on the New York Stock Exchange beat declining ones 2,208 to 857, as volume hit more than 1.1 billion shares. Nasdaq winners topped losers 3,140 to 978, as more than 1.8 billion shares changed hands.
"Ebullience and exuberance are back," said Michael Farr, president of Farr, Miller & Washington. "For a market that has lacked direction, it is reacting tenfold to the first positive catalyst that has come along."
In currency markets, the dollar weakened against both the euro and the yen. Treasury securities soared, extending the sharp gains of the previous two days following the release of the labor data.
Economic data draws in buyers
The Labor Department said unemployment rose to 4.1 percent in May from a 30-year low of 3.9 percent in April, while hourly wages rose only 0.1 percent, well below the 0.4 percent forecast. And there were only 231,000 new jobs created in May, which was well below Wall Street forecasts of 375,000. In fact, the additional jobs all came from government hiring and there was actually a decline in jobs in the private sector.
 "It's another piece of the ongoing trend of a slowing economy," said Art Hogan, chief market analyst at Jefferies & Co. "The credit tightening cycle is nearing an end and we have the equity markets celebrating that."
One other component of the employment report -- average hourly wages -- also came in weaker than expected, rising by 1 cent to $13.65 an hour.
"We've had such robust economic indicators over the past few months that today's report was really regarded as a sign of relief," Brian Jones, economist with Salomon Smith Barney, told CNNfn's market coverage.
Only one piece of data next week could provide direction - the release next Friday of the producer price data for May. PPI fell 0.3 percent in April, as oil prices dropped. The core rate, which excludes food and energy prices, rose 0.1 percent. Analysts surveyed by Reuters expects May PPI rose 0.2 percent.
 Investors took comfort in the data as a further indication that an economic slowdown is occurring. The sentiment that interest rate hikes by the Federal Reserve may end soon brought buyers to the table.
Tech leaders soared. Cisco Systems (CSCO: Research, Estimates) gained 3-7/16 to 64-3/8, Oracle (ORCL: Research, Estimates) rose 2-5/16 to 80-3/16, and Intel (INTC: Research, Estimates) jumped 4-1/2 to 134-3/16.
On the tech-watch radar screen next week will be Microsoft (MSFT: Research, Estimates), which received a reprieve in its antitrust trial after the judge gave the company and the government a few more days to file additional legal arguments before he rules on government proposals to break up the software maker.
In an order issued after a conference call, the judge overseeing the case said the government has until Monday to present its response to Microsoft's latest statement, and that Microsoft has until Wednesday to fire back. Microsoft shares rose 1-3/4 to 66-5/16.
 Greg Nie, technical analyst for First Union Securities, told CNNfn's market coverage that the rally's sustainability depends on the performance of the financial stocks. (444K WAV) (444K AIFF)
Financial stocks, seen as indicators of interest rate sentiment, helped lift the Dow. J.P. Morgan (JPM: Research, Estimates) rose 6-7/8 to 138-13/16 American Express (AXP: Research, Estimates) gained 2-5/8 to 56-1/2, and Citigroup (C: Research, Estimates) jumped 2-15/16 to 66-1/4.
Stock deals
Northwest Airlines (NWAC: Research, Estimates) gained 6-3/8 to 35-7/16, after a report that rival American Airlines plans to spread its wings with a bid for the carrier. KSTP-TV in St. Paul, Minn., citing unnamed "well-placed" sources within the industry, said Don J. Carty, chairman and CEO of American parent AMR (AMR: Research, Estimates) and Northwest President and CEO John Dasburg have been in contact about a possible merger. Both companies have declined comment on the report.
AMR shares fell 1-1/8 to 28-5/16.
 Gillette (G: Research, Estimates) rose 13/16 to 35-9/16, a day after the company said it was in talks with Newell Rubbermaid (NWL: Research, Estimates) to sell its stationery unit, which produces such products as Parker pens and Liquid Paper. Newell gained 3/16 to 26-15/16. 
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