Blue-chip bonanza
U.S. stocks rise on strength in traditional names, overcoming early tech weakness.
March 6, 2002: 5:12 p.m. ET
By Staff Writer Alexandra Twin
|
NEW YORK (CNN/Money) - A blue-chip surge led the markets higher Wednesday, as strength in traditional names - helped by an upgrade of financial services firm J.P. Morgan Chase - transformed into an across-the-board rally after the release of strong economic data.
The Dow Jones industrial average rose 140.88 to 10,574.29. The Nasdaq composite gained 24.11 to 1,890.40. The Standard & Poor's 500 index added 16.63 to 1,162.77.
"It's a fairly impressive rally. There's some serious longer-term money flowing in today (Wednesday)," David Briggs, head of equity trading at Federated Investors, told CNNfn's Street Sweep. "We continue to get positive indicators each day."
The Federal Reserve in its "beige book" -- a diagnosis of economic health in each of the Fed's 12 districts -- said it saw signs of economic improvement in January and early February, boosted by gains in retail sales.
The news, released late in the day, provided a follow-through on the positive momentum already set in place earlier.
"The anecdotal evidence of the beige book seems to confirm what all these economic reports have been saying," Wayne Ayers, chief economist at Fleet Boston Financial, told CNNfn.
Deutsche Banc Alex. Brown raised its rating on Dow component J.P. Morgan Chase (JPM: up $1.54 to $34.05, Research, Estimates) to "strong buy," with a $46 price target, saying it believes the economy is strengthening and the banking and brokerage company's shares stand to benefit.
In other economic news, the government said January factory orders rose 1.6 percent, stronger than the 0.7 percent boost in December. Economists surveyed by Briefing.com were expecting a rise of 1.5 percent.
Strength in networking issues, telecommunications, and computer software helped the Nasdaq rise above the pressure of a weak data-storage sector, hurt by a warning from McData.
"For the moment it's a blue-chip gain," said Alan Ackerman, market strategist at Fahnestock & Co. "The economy is showing signs of improving, but techs are still lagging. So there's more safety for investors in blue chips."
Treasury prices closed lower, with the 10-year note yield rising to 5.05 percent from 5 percent Tuesday. Light crude oil futures were flat at $23.15 a barrel in New York. Gold futures were lower in Chicago trade.
In global markets, European bourses inched higher, and Asian markets closed higher Wednesday. The dollar fell versus the yen and the euro.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by 12-to-5 as 1.51 billion shares traded. On the Nasdaq, winners edged losers 11-to-6 as 1.88 billion shares changed hands.
Storage stocks slide
Of the 30 issues comprising the Dow industrials, 27 closed the day higher.
The Dow's biggest gainers were: 3M (MMM: up $1.42 to $121.57, Research, Estimates), Merck (MRK: up $1.21 to $62.67, Research, Estimates), Boeing (BA: up $1.65 to $49.86, Research, Estimates) and General Motors (GM: up $1.31 to $59.92, Research, Estimates).
Network storage provider McData (MCDT: down $4.28 to $11.65, Research, Estimates) sent a chill through the sector after it lowered its earnings and revenue estimates for the first quarter late Tuesday. The company previously said its results would be between breakeven and a profit of 2 cents a share, but it now expects to post a loss of 2 cents to 4 cents a share.
J.P. Morgan was one of several firms that cut McData's first-quarter, 2002 and 2003 earnings estimates. The firm also cut the first-quarter and 2002 estimates of sector mate EMC (EMC: down $0.25 to $11.30, Research, Estimates).
But the tech sector managed to move higher despite the pressure.
Wireless and other telecommunications stocks were lifted by an upbeat forecast from long-distance service provider Sprint (FON: up $1.27 to $15.83, Research, Estimates) that the company is on track to meet its financial targets for 2002 and that subscriber growth is on the rise. Nextel's (NXTL: up $0.80 to $6.28, Research, Estimates) chief financial officer also said late Tuesday that 2002 looked strong.
Credit Suisse First Boston assumed coverage of several Internet names, including retailer Amazon.com (AMZN: up $0.36 to $16.33, Research, Estimates), which it rated "buy." On Tuesday, Amazon.com announced that its chief financial officer will be stepping down.
ImClone Systems (IMCL: up $4.81 to $28.63, Research, Estimates) added strength to the Nasdaq after the biotech developer and Bristol-Myers Squibb (BMY: up $1.79 to $50.22, Research, Estimates) announced late Tuesday a restructuring of their deal to co-develop and co-produce the colon cancer drug Erbitux.
Shares of teen retailer American Eagle Outfitters (AEOS: up $2.07 to $26.40, Research, Estimates) rose after the company reported fiscal fourth-quarter earnings per share of 60 cents, topping estimates by 2 cents but below the 68 cents earned one year earlier.
A proxy advisory firm has recommended that institutional shareholders, which control 23 percent of Hewlett-Packard's (HWP: down $0.42 to $20.18, Research, Estimates) stock, vote in support of the company's $22 billion purchase of Compaq Computer (CPQ: up $0.40 to $10.98, Research, Estimates). While this in no way assures the deal's completion, a negative opinion by the firm might have meant its end.
In other news, President Bush announced late Tuesday that the U.S. will impose a 30 percent tariff on steel imports during the next three years in an effort to help the ailing U.S. steel industry.
A handful of steel stocks, including Nucor (NUE: Research, Estimates) and Steel Dynamics (STLD: up $1.04 to $14.29, Research, Estimates) enjoyed gains on the news. 
|
| SPECIAL: |
|
|
|
|
|
|
