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Nasdaq steps above 3,000
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December 11, 2000: 4:33 p.m. ET
Semis lead tech rally as investors seek bargains; financials boost the Dow
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - The Nasdaq composite index rallied for the second straight session Monday, soaring above 3,000 for the first time in three weeks, as investors bet that most negative news about revenue growth has already been priced into these stocks.
And investors are keeping their fingers crossed that the one glaring uncertainty weighing on the market, the U.S. presidential race, may finally yield a winner.
 "If you really look at the action itself, most people in the market believe the worst is over, at least on a short-term basis," said Charles Payne, head analyst at Wall Street Strategies. "There's renewed hope that the presidential election is going to come to a conclusion and everyone is hoping the Fed is going to move to a neutral stance as a prelude to a series of decreasing the interest rates."
A Supreme Court hearing that will likely determine the fate of the election concluded at midday, and the campaign staffs of both George W. Bush and Al Gore awaited word from the justices.
"It has had a psychological effect so if we do get this thing settled, it will be a positive for the market," Edward Keon, director of quantitative research at Prudential Securities, told CNNfn's In the Money.
 The Nasdaq rose 97.28 points, or more than 3 percent, to 3,014.71. The action followed Friday's rally, which added more than 160 points to the index. But the index is still nearly 12 percent down from Election Day on Nov. 7.
The Dow gained 12.89 to close at 10,725.80, while the S&P 500 advanced 10.34 to 1,380.23.
Market breadth was positive and volume was strong with the Nasdaq seeing its seventh strongest day. Analysts said one of the contributing factors was that a lot of money being held by fund managers was finally entering the market.
On the New York Stock Exchange, advancers beat decliners 1,671 to 1,183, as more than 1.2 billion shares changed hands. Winners outpaced losers on the Nasdaq 2,308 to 1,671, as more than 2.4 billion shares were traded. In other markets, Treasury securities edged lower. The dollar rose against the euro but was little changed versus the yen.
Tech surge led by semis
Investors took some comfort in the fact that much of the negative corporate news regarding revenue growth has already been priced into many of these stocks.
"What has happened over the past several months is valuations have come down a lot to where we think stocks are pretty reasonably valued here," said Prudential's Keon.
The chip sector breathed life into the beaten-up tech sector. Intel (INTC: Research, Estimates) gained $3.44 to $37.44, after the leading chip maker said it has built the world's smallest and fastest transistor -- a milestone that will allow the company to build microprocessors that will be 10 times more powerful than the ones available today.
 But that wasn't the only thing helping the semis, according to State Street's chief market strategist, Ned Riley. "I would say the new chip is less significant than the fact that they announced a terrible fourth quarter and investors are encouraged by the price action of the stock after the announcement," he said.
Prudential's Keon agreed. "One of the signs is that when companies do pre-announce, they haven't been hit as hard this time around, so that suggests the market is starting to look longer term and saying these values are not that unreasonable," he said.
Other semis followed Intel's lead. Applied Materials (AMAT: Research, Estimates) jumped $6.75 to $50.94, and Micron Technology (MU: Research, Estimates) gained $2.81 to $37.50.
"In the case of the tech sector, I think they've been so beaten up that I don't think there's much more negative news that can hurt it," Linda Jay, NYSE floor specialist with RPM Specialists, told CNNfn's Market Call.
But not all techs were attracting buyers. Qualcomm (QCOM: Research, Estimates) tumbled $3.75 to $99.50 after an international arbitration panel ruled that the wireless communications technology company must share royalties with a former partner in South Korea, warning it would take an $80 million charge to cover the payments.
With little else new on the corporate news front or the economic front for investors to hang their hats on, investors were looking for bargains as they awaited some clarity about the election impasse.
Helping draw investors to the technology sector was the sentiment that the Federal Reserve may moderate its inflationary stance at its next monetary policy-making meeting.
Dow's gains led by financial stocks
With the Federal Reserve's monetary policy meeting just eight days away on Dec. 19, investors are taking comfort from last week's comments by Fed Chairman Alan Greenspan -- the first indication that the inflationary tide may be turning.
"Chairman Greenspan has really been a beacon of stability," Chris Wolfe, equity market strategist with J.P. Morgan, told CNNfn's market coverage. "I think our sense is we'll see a bias shift rather than a rate cut."
 Interest-rate-sensitive financial stocks boosted the Dow. J.P. Morgan (JPM: Research, Estimates) surged $9.50 to $156.75, Citigroup (C: Research, Estimates) gained $1.38 to $52.88, and American Express (AXP: Research, Estimates) advanced $1.69 to $56.50.
"I do think that there are a group of investors that have changed their opinion about interest rates and that is extremely positive for the market," said State Street's Riley. "We clearly do better in a falling interest rate environment."
One analyst cautioned that investors should temper their buoyancy since the road ahead may still be a bumpy one.
Michael Farr, president at Farr, Miller & Washington, told CNNfn's Market Call that stocks could rally for the rest of the year, but that difficult earnings comparisons with the strong first quarter of 2000 may limit gains early next year. (378K WAV) (378K AIFF) 
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