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Dow 10,000, here we come? Again?
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November 14, 2001: 6:34 p.m. ET
Another minor rally, thanks in part to free-spending American consumers and, believe it or not, Hewlett-Packard.
Bethany McLean
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NEW YORK (CNN/Money) - IT'S A RALLY! Not a huge one, but another one. A company that can do no right did something right, there's progress (if that's the right word) in Afghanistan, and it looks like neither economic weakness nor political uncertainty can stop American consumers from consuming. What more could the market want? The Nasdaq added 11.08 to 1,903.19, while the Dow gained 72.66 to 9,823.61. Dow 10,000, here we come? (It was more fun the first and second time, not to mention the third and fourth time, wasn't it?)
WE'RE BACK! Begone, recession! That fearsome creature -- the free-spending American consumer -- is back! The government announced today that retail sales soared 7.1 percent in October, which was about three times the Street estimate and the largest gain since the Commerce Department began collecting this data in 1967. Record auto sales helped by extremely generous dealer incentives (zero percent -- wish someone would try that with mortgages) were the main driver (no pun intended). But we also bought other things like clothes (me!) and sports stuff (umm, no, not me). Keep in mind that a healthy consumer may mean -- gasp -- that the Fed is done cutting rates for now. And pity the poor sages -- they might have to find another reason to be bullish.
STOCK STUFF It was a day of surprises, where the losers now later did win. (How's that for Dylan dislyrica?) Hewlett-Packard climbed $1.85 to $22.08 after announcing earnings that beat expectations (has Carly finally learned the art of underpromising?) while Compaq, HP's betrothed, added $1.20 to $10. (But it's far from a perfect 10.) CSFB says Compaq is a buy! Isn't that nice? And IBM says that a merged HP/CPQ, while risky, validates Big Blue's strategy. (Not that IBM needs external validation, mind you.) Amazon.com soared $2.17, or 30 percent, to $9.48 on those retail sales data -- or on short-covering due to the retail sales data. Interpublic jumped $4.89 to $29.14 on word that it lost money but beat estimates unless you factor all sorts of charges, but who wants to do that? Tiffany added $1.65 to $28.35 -- the holidays look Scrooge-y and earnings fell sharply, but they were better than expectations! Whoopee. Eastman Kodak gained 82 cents to $27.28 on news that it is restructuring itself -- again. Home Depot jumped $2.23 to $46.23 on in-line earnings. But Network Appliance fell $2.90 to $15.29 after doing a no-no by saying it sees the tough times continuing. Clearly, NTAP hasn't learned to spin that as "stabilization."
LOOSE CHANGE
Sign of the times -- a good one! Weight Watchers is getting bigger! The company increased the price of its offering, while Prudential Financial increased the number of shares it's selling.
It's not the '90s anymore! Charles Schwab slipped 27 cents to $15.56 after saying that trading fell 40 percent in October from a year ago. "SCH shares are fully valued...investors have overreacted to evidence that activity has bottomed...investors should not confuse a bottoming of activity with sustained top-line driven earnings growth, which SCH's high PE seems to take for granted," writes Merrill's Judah Kraushaar. Valuation matters? Wow.
It's not the '90s anymore, Part II. Writes Pru analyst Wayne Hood: "We are lowering our rating on Kohl's to "hold" from "buy" as we now believe the stock reflects the company's exceptional fundamentals...since its year low on September 21, 2001 the stock is up 51 percent versus an 18 percent increase for the S&P 500." That valuation thing again. Wow. Kohl's gained 44 cents to $66.69
Philip Morris gained 58 cents to $47.58 on news that a West Virginia jury says cigarette makers are not obligated to pay for the medical monitoring of healthy individuals who smoke (which has to be one of the more ridiculous concepts I've heard).
"Cautious optimism." That's how Fidelity Magellan manager Robert Stansky describes his state of mind. Magellan has lost a little bit less than the S&P 500 over the past six months, which is an accomplishment of sorts. So the glass is half-full, but will it be half-empty soon?
"In hindsight we made some very bad investments in non-core businesses," said Enron CEO Ken Lay on an investor conference call today. At least he finally admitted it. Enron added 2 cents to $10. 
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