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Nasdaq rises, Dow falls
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January 17, 2001: 5:43 p.m. ET
Tech stocks draw buyers amid solid profits but blue chips dip
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - The Nasdaq composite index rose for the first time in three sessions Wednesday after a batch of strong profit reports from technology companies sent investors pouring into chip, communications and software stocks.
But the Dow Jones industrial average fell, hurt by 3M, which missed its quarterly earnings targets.
The Nasdaq's latest gains have helped turn last year's worst-performing major stock index into the best gainer of the new year, up almost 9 percent.
For a day, anyway, fears about the slowing economy gave way to optimism that the worst earnings news from technology firms may be over. In heavy trading, investors bought some of last year's hardest hit tech stocks. WorldCom, Yahoo! and Dell Computer all rose.
 "We were overdue for a bounce after some very oversold conditions," Charles White, president and portfolio manager of Avatar Associates, told CNNfn's Talking Stocks. "Maybe we are getting to a point where the market is beaten-up enough."
But General Motors fell after saying fourth-quarter profits declined, 3M faltered on news that its earnings missed forecasts, and Boeing lost value even after profits topped forecasts. The losses sent the Dow lower following Tuesday's big gains.
Still, two big Nasdaq movers, Juniper Networks, a computer networker, and Applied Micro Circuits, a maker of communication chips, rose on strong profit reports.
By session's end, the Nasdaq rose 64.23 points, or 2.5 percent, to 2,682.78, its first gain since Thursday. (Market's were closed Monday for Martin Luther King Jr.'s birthday). The Dow shed 68.32 to 10,584.34, following a gain of more than 100 points in the previous session. The Standard & Poor's 500 index advanced 2.82 to 1,329.47.
Over the last several months, Nasdaq rallies like Wednesday's have given way to sell-offs. And the rest of the week could be no different. But either way, technology stocks, after falling steadily since March, are off to a good start in 2001. The Nasdaq is up 8.6 percent this year following a tumble of nearly 40 percent in 2000.
More stocks rose than fell. Advancing issues on the New York Stock Exchange topped declining ones 1,588 to 1,340 as 1.3 billion shares traded. Nasdaq winners beat losers 2,372 to 1,597. Nearly 2.8 billion shares changed hands. That's just short of the record 3.1 billion shares traded Jan. 3, when the Federal Reserve made a surprise interest rate cut.
In other markets, Treasury securities rose. The dollar gained against the euro and yen.
Juniper jumps
A series of buoyant earnings lifted technology stocks. Juniper Networks, off 44 percent from its 52-week high, and Applied Micro Circuits, down by 27 percent from its peak, both rallied after the companies topped quarterly profit estimates.
Juniper (JNPR: Research, Estimates), a maker of networking equipment, gained $8.38 to $136.25, while semiconductor maker Applied Micro Circuits (AMCC: Research, Estimates) surged $10 to $80.38.
 Juniper said pro forma income in the fourth quarter, excluding the amortization of goodwill and special charges, rose to $84.6 million, or 27 cents a share, from $4.77 million, or 2 cents, a year earlier. Applied said pro forma net income surged to $48.1 million, or 16 cents a share, from $12.1 million, or 5 cents per share, a year ago.
WorldCom (WCOM: Research, Estimates) gained $1.19 to $22.50, Dell (DELL: Research, Estimates) advanced $1.19 to $22.26 and Yahoo! (YHOO: Research, Estimates) surged $2.88 to $30.25.
WorldCom, Dell and Yahoo! all fell more than 55 percent last year.
'Old economy' suffers
No less than six Dow components trotted out financial results for the last three months of 2000. The reports were mixed.
General Motors (GM: Research, Estimates) slipped 88 cents to $54.88 after the automaker said fourth-quarter earnings fell to $609 million, or $1.15 a share, beating forecasts by 3 cents per share.
Profit also fell at newly merged J.P. Morgan Chase. The company reported earnings of $763 million, or 37 cents a share, excluding one-time items, down from $2.2 billion, or $1.09 a share, a year earlier. J.P. Morgan Chase (JPM: Research, Estimates), which fell short of estimates, slid 19 cents to $53.
Click here for a comprehensive look at the day's earnings.
Eastman Kodak (EK: Research, Estimates) rose 56 cents to $41.88 after the company met lowered forecasts. Kodak profit fell to 68 cents a share, excluding one-time items, from $1.27 cents per share in the prior year.
But General Electric (GE: Research, Estimates) said earnings for its fourth quarter rose 16 percent to 36 cents a share, matching forecasts. Its stock shed 69 cents to $46.69.
The biggest upside surprise among Dow components came from Boeing (BA: Research, Estimates). The company said it earned $877 million, or $1.01 per share, in the last quarter, surging past estimates of 91 cents per share. Still, investors sent Boeing stock down $2.25 to $58.759.
Intel (INTC: Research, Estimates) gave up earlier gains, slipping 88 cents to $30.50. The chip maker said late Tuesday it earned 38 cents a share in the fourth quarter, topping estimates by a penny thanks in part to investment gains.
3M (MMM: Research, Estimates) tumbled more, losing $3.50 to $110. The company in a preliminary report said fourth-quarter earnings missed expectations by 8 cents a share because of a strong U.S. dollar, which makes exports expensive, and a slowing economy.
Economists say the weakening U.S. economy should prompt the Federal Reserve to cut interest rates again in two weeks. Two economic reports Wednesday may have given the Fed more reason to lower borrowing costs.
 The Consumer Price Index, the most widely watched inflation gauge, rose 0.2 percent in December, the government said. Excluding food and energy, the index rose 0.1 percent, less than expected.
Faced with low inflation, the central bank may be more willing to aggressively cut borrowing costs to spur economic growth.
Separately, industrial production showed surprising weakness last month, giving the Fed more reason to cut interest rates.
"There's no barrier to the Fed lowering interest rates significantly," John Ryding, economist at Bear Stearns, told CNNfn's market coverage.
Mark Donahoe, institutional equity sales trader at U.S. Bancorp Piper Jaffray, told CNNfn's market coverage he expects a half percentage point reduction in borrowing costs later this month.
A move of that size would be unusual but not unheard of. Under Alan Greenspan, the Fed chairman, the central bank has more often made moderate, quarter percentage point changes in rates. 
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