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U.S. stocks bounce back
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July 9, 2001: 4:26 p.m. ET
Nasdaq, S&P snap four-session losing streak amid optimism; Dow also gains
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - The Nasdaq composite index snapped a four-session losing streak Monday amid some hopes that quarterly corporate results will appear brighter than the warnings that flooded the markets during the past month.
"It's a mildly affirmative day as recovery makes the scene," wrote Bryan Piskorowski, market analyst with Prudential Securities, in a note to clients.
Don't break out the champagne yet – the markets may still be in for a rough ride. Some said the rebound was merely a result of the dismal market performance last week.
"It is a little bounce and it's not to be unexpected given how much the markets sold off last week so I wouldn't read too much into this," Brett Gallagher, head of U.S. equities with Julius Baer, told CNNfn's Street Sweep. "Earnings are going to be very important to help set the tone, but the out quarters are still very much at risk and those estimates have not come down to the extent I think they should."
The negative bias kept many investors sidelined.
"It's a little bump off of a serious decline – sellers are walking away and some people are doing a little bit of bottom fishing," said Ken Sheinberg, head of NYSE listed trading with SG Cowen. "Stocks were pretty depressed and they're just bouncing back a little bit – there's nothing behind it."
The Nasdaq composite index gained 22.55 points to 2,026.71. The Dow Jones industrial average rose 46.72 points to 10,299.40, while the S&P 500 rose 8.19 to 1,198.78.
With little in the way of catalysts for buying or selling, investors appeared to be erring on the side of caution ahead of the flood of corporate results reports due during the next few weeks.
"The earnings stink," said Alan Kral, vice president and portfolio manager with Trevor Stewart Burton. "Earnings are down 16 percent, multiples are sky high, and the whole world is built on hope and a lot of cash flow."
But analysts said there were rumblings of optimism.
"The bulk of the warnings season is out of the way and I think there's some optimism that the Nasdaq was able to hold 2,000 on Friday," said Bill Meehan, chief market analyst with Cantor Fitzgerald.
Optimism may be trying to prop up the markets but it will be tough to sustain – more bad news hit Wall Street after the closing bell. Fiber-optics supplier Corning (GLW: down $0.03 to $15.10, Research, Estimates) said that it is taking a second-quarter charge of $5.1 billion and shutting three plants which will result in the loss of 1,000 jobs.
More stocks rose than fell but volume remained light. Nasdaq winners topped losers 2,029 to 1,722 as 1.4 billion shares traded. Advancing issues on the New York Stock Exchange topped declining ones 1,592 to 1,478 as 1.04 billion shares traded.
In other stock markets, Europe's and Asia's lost ground. Treasury securities were mixed. The dollar edged lower against both the yen and the euro.
Focus on AT&T, Comcast
With nothing on the economic calendar, the major story of the day was an unsolicited $44.5 billion stock bid for AT&T's (T: up $1.98 to $18.70, Research, Estimates) broadband cable business by No. 3 U.S. cable TV operator Comcast (CMCSK: down $2.98 to $39.30, Research, Estimates).
"The AT&T thing gets some money flowing around into the mergers-and- acquisitions end of the business, which is adding some froth," said Kral. "The underlying bias is on the upside until bad news comes out, and I don't think the bad news is over."
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Columnist Michael Sivy names some stocks with P/E ratios lower than their growth rates.
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While AT&T gained 12 percent and Johnson & Johnson (JNJ: up $1.71 to $52.12, Research, Estimates),Merck (MRK: up $1.16 to $64.60, Research, Estimates) and Procter & Gamble (PG: up $1.14 to $66.14, Research, Estimates) all advanced, the Dow's gains were tempered by Boeing (BA: down $1.47 to $52.83, Research, Estimates) and IBM (IBM: down $1.78 to $104.72, Research, Estimates).
"Stocks don't go straight down and stocks don't go straight up," said SG Cowen's Sheinberg. "The market's in trouble – technically, it's in trouble and fundamentally it's in trouble. We're going to bounce around with a downward bias."
The tech-heavy Nasdaq steadied on the upside, led by Cisco Systems (CSCO: up $0.46 to $17.25, Research, Estimates), Sun Microsystems (SUNW: up $1.14 to $14.82, Research, Estimates), and Oracle (ORCL: up $0.70 to $18.91, Research, Estimates).
Digesting corporate news
In other news, Webvan (WBVN: down $0.01 to $0.05, Research, Estimates) said it is shutting down and will file for bankruptcy protection. The troubled online grocer added it will not resume operations but will seek to sell its assets.
Among "brick-and-mortar" food stores, Safeway's (SWY: down $3.55 to $44.46, Research, Estimates) second-quarter results fell in line with Wall Street expectations, excluding its Internet operations, as the No. 3 U.S. grocery chain increased sales and kept expenses in check.
Computer services provider NCR (NCR: down $6.07 to $38.70, Research, Estimates) said revenue and earnings for its second quarter will be below the company's previous guidance, primarily due to customer deferrals in the company's data warehousing business. 
Click here to send mail to Staff Writer Catherine Tymkiw
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