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Dow continues to wow
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August 14, 2000: 5:43 p.m. ET
Home Depot, Hewlett-Packard power index to tenth gain in 11 sessions
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - The Dow Jones industrial average rose for the tenth time in 11 sessions Monday, reaching its highest point in more than four months, as investors poured into Home Depot and Hewlett-Packard, which are expected to post double-digit quarterly profit growth this week.
The Nasdaq composite index also headed higher after rising just 2 points over the last five sessions. Gains in chip-related stocks such as Intel and Applied Materials, which have fallen through much of August, lifted the index. Positive brokerage remarks about Micron Technology aided the entire semiconductor sector.
The broad stock gains come amid wide expectations that the Federal Reserve, which has tightened credit six times since June, 1999, won't raise the cost of borrowing money at a meeting next week.
"We are not looking for any major increases in interest rates," Michael Carty, stock market strategist at New Millennium Asset Advisors told CNNfn's market coverage. Carty likes the prospects for earnings strength in the second half of the year.
 The Dow rose 148.34, or 1.4 percent, to 11,176.14, one session after crossing the 11,000 mark for the first time since April 25. Monday's is the Dow's highest close since April 3, when the index finished at 11,221.93. The Nasdaq, meanwhile, advanced 60.02, or 1.6 percent, to 3,849.49, while the S&P 500 rose 19.24 to 1,491.19.
Despite the gains, trading volume was light as Wall Street awaits direction on borrowing costs and earnings. The next Fed meeting, when central bankers mull rates and also issue a closely watched statement on the economy, is more than a week away. Corporate profit reports for the July-September period, meanwhile, are months down the road.
More stocks rose than fell Monday. Advancing issues on the New York Stock Exchange topped decliners 1,842 to 1,138 on volume of 784 million shares. Nasdaq winners edged out losers 2,096 to 1,933 as more than 1.2 billion shares changed hands.
John Pickett, of LaBranche & Co., said the low volumes clouds the rally's significance.
 "I'm not really sure what the market is showing us here," Pickett told CNN's Street Sweep. "Seven hundred and eighty million shares: That's not a lot."
In other markets, the dollar was little changed against the yen but declined versus the euro. Treasury securities, which rallied last week, were little changed
Blue chips draw buyers
Stocks posting earnings this week rose as investors snapped up companies expected to announce strong results.
Among the Dow gainers, home improvement retailer Home Depot (HD: Research, Estimates) jumped 2-3/8 to 58-5/16. The nation's largest specialty retailer is expected to report earnings of 36 cents a share for its fiscal second quarter Tuesday, up nearly 25 percent from 29 cents in the year-earlier period, according to First Call, which tracks earnings estimates.
Hewlett-Packard (HWP: Research, Estimates) gained 4-1/4 to 114-1/4. The computer and printer maker is forecast to earn 85 cents per share in its fiscal second quarter Wednesday, a 30 percent gain from 65 cents per share a year ago.
 Intel and Applied Materials, meanwhile, rose after Salomon Smith Barney raised its earnings estimates for Micron Technology, an NYSE-listed stock.
Intel (INTC: Research, Estimates) gained 9/16 to 94-7/16, Applied Materials (AMAT: Research, Estimates) jumped 2-7/16 to 71-5/8 and Micron Technology (MU: Research, Estimates) added 4-1/8 to 79-3/4. Salomon increased its fourth-quarter earnings per share forecast for Micron to $1.00 from 78 cents.
But fears of a cooling in profit growth, which have hurt tech stocks this month, have not gone away. Dell Computer (DELL: Research, Estimates) fell 1 to 36-11/16, continuing losses that began last week after the computer maker posted softer-than-expected quarterly revenue. And despite falling to nearly a 52-week low of 35, Dell is still relatively expensive, trading at 40 times earnings.
"It's the higher multiples that have put off buyers for now," said Alan Ackerman, senior vice president at Fahnestock & Co. "If the economy slows, it will affect technology stocks."
More news from CNNfn.com for investors:
Chuck Hill, director of research at First Call, said companies will in fact face a slowdown in earnings growth after the Fed's six interest rate hikes in more than a year.
"Once we get into the fourth quarter we will seeing analysts cutting estimates more than normal," Hill told CNNfn's Before Hours.
Mergers in the news
A series of mergers crossed the wires Monday. In the biggest, News Corp. (NWS: Research, Estimates) rose 3/8 to 50-1/8 after agreeing to pay $5.4 billion in cash and stock for Chris-Craft Industries. Chris-Craft (CCN: Research, Estimates), which owns 10 television stations, jumped 17 to 79.
Broadcom Communications (BRCM: Research, Estimates) gained 15-11/16 to 240-3/4. The maker of broadband digital transmission devices said it will acquire privately held optical communications chipmaker NewPort Communications for roughly $1.24 billion in stock.
And Chiron Corp (CHIR: Research, Estimates) fell 1-15/16 to 46-11/16 after agreeing to buy rival biotech PathoGenesis (PGNS: Research, Estimates) for about $700 million. PathoGenesis jumped 5-7/32 to 37-31/32.
In other stocks in the news, Verizon Communications (VZ: Research, Estimates) rose 1-1/4 to 42-3/4. The rise came despite word from the union at the nation's largest local phone company that talks in a weeklong Verizon strike are moving farther apart.
The week ahead
After several years of gains, 2000 is shaping up to be a tough year to make money in U.S. stocks. Both the Dow Jones industrial average and the Nasdaq are down modestly for the year, and analysts say there may be little this week to reverse that.
Wednesday brings July's Consumer Price Index. Expectations for a small increase should not change the view that the Federal Reserve will leave interest rates unchanged when it meets a week from Tuesday.
Anthony Chan, chief economist at Banc One Investment Advisors, expects a tame 0.1 percent increase in the closely watched inflation gauge.
"Given our forecast, we do not expect that this statistical release will have much impact on the policy debate when the Fed meets," Chan wrote in his weekly report to clients.
Recent data have shown that the U.S. economy may be slowing under tighter credit, giving Fed officials little reason to keep hiking borrowing costs
But Kevin Bannon, chief investment officer at Bank of New York, told CNNfn's market coverage that the markets are poised for a year-end rally once the Fed meeting is past. (296K WAV) (296K AIFF). 
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