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Wall St. rises; Nasdaq leads
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January 25, 2000: 5:47 p.m. ET
In seesaw session, stocks finish stronger, led by technology
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - U.S. stocks rose in volatile trading Tuesday, paced by gains to the Nasdaq composite index, the largest technology issues of which drew a flood of buyers in the session's final hour.
Stocks swung wildly for much of the day as investors seemed torn between fears of higher interest rates and optimism over another batch of solid profit reports.
In the end, the Dow Jones industrial average edged higher, boosted by strong earnings from Disney and Procter & Gamble.
While all the major market indexes rose, breadth on the New York Stock Exchange and Nasdaq was negative, leading analysts to question the conviction behind Tuesday's gains.
"The Nasdaq is increasingly driven by a lot of day-to-day momentum players," said Richard Cripps, chief market strategist at Legg Mason. "Technically, (the Nasdaq) was oversold and they came rushing in. I think it's more of a bounce from yesterday's sharp sell-off."
The Nasdaq composite index gained 71.34 points, or 1.74 percent, to 4,167.42. The Dow Jones industrial average rose 21.72 points, or 0.20 percent, to 11,029.89. And the broad S&P 500 climbed 8.13 points, or 0.58 percent, to 1,410.04.
The day's seesaw session came as strong earnings reports competed with concerns that higher interest rates will erode corporate profits.
"It's pretty mushy out there," Charles Blood, financial market strategist at Brown Brothers Harriman, told CNNfn. "But it's not a bad showing after yesterday's (Monday's) drubbing."
Tuesday's gains follow a broad sell-off Monday, when the Dow plunged 243.54 points, its 10th-largest point drop on record.
Ahead, Blood foresees more of the same, predicting a bear market for stocks as rising interest rates eat into company earnings and investors flee overvalued shares.
Most economists expect the Federal Reserve next week to hike interest rates by a quarter of a percentage point to slow the economy and preempt rising inflation. But Blood sees a more dramatic half percentage point increase, bringing the Fed's main lending rate to 6 percent, its highest in five years.
Market breadth Tuesday was negative, with losing stocks beating winners 1,776 to 1,250 on the New York Stock Exchange. Declining issues topped advancers 2,190 to 2,016 on the Nasdaq.
Still, the Nasdaq's five biggest stocks, which count for about 25 percent of the index's movement, all rose. Microsoft (MSFT) climbed 1-9/16 to 102-13/16, Intel (INTC) gained 2-3/4 to 101-9/16, Cisco (CSCO) jumped 3-1/16 to 112-/18, MCIWorldCom (WCOM) leapt 2-3/8 to 43-3/16, and Dell (DELL) rose 9/16 to 42-1/8.
Volume was heavy, with 1 billion shares changing hands on the New York Stock Exchange and 1.7 billion issues traded on the Nasdaq.
In other markets, Treasury bond prices rose, lowering the yield on the 30-year bond to 6.63 percent. The dollar climbed against the yen and euro, which at one point fell below the psychologically significant $1 mark.
4Q earnings solid
Stocks found support from strong corporate results for the current reporting period. The two-thirds of the S&P 500 companies posting results so far are coming in an average of 24 percent above the year-earlier period, according to earnings tracker First Call. And all of the Dow components reporting either met or beat Wall Street expectations.
Analysts also said the market gained from a report showing the strongest consumer confidence on record, which may bode well for corporate profits ahead.
"That's positive for the market, because consumers feel the economy is going well," Peter Cardillo, director of research at Westfalia Investments, said of the Conference Board report. "After yesterday's (Monday's) declines, people are coming back into the market and earnings are good."
Six Dow components issued solid earnings news Tuesday and late Monday.
Among them, Disney (DIS) jumped 4-3/16 to 37-1/2 after reporting preliminary first-quarter earnings that soared past Wall Street's estimates. The entertainment company late Monday posted preliminary profit of $515 million, or 25 cents per diluted share.
Johnson & Johnson (JNJ) climbed 1-9/16 to 85-1/2 after posting fourth-quarter profit that exceeded Wall Street's consensus estimate. The health-care products maker reported earnings of $796 million, or 56 cents per share, before special charges.
AT&T Corp. (T) rose 5/8 to 51-1/8 after beating fourth-quarter earnings forecasts. The nation's biggest long-distance provider earned $1.84 billion, or 57 cents a diluted share.
Exxon Mobil (XOM) rose 3/16 to 84-1/6 after beating forecasts for its first quarterly earnings as a combined company. The company had fourth-quarter income excluding merger expenses and special items of $2.7 billion, or 77 cents a diluted share.
SBC Communications (SBC) fell 2-1/8 to 39-7/8 after posting fourth-quarter results that met analysts' targets.
Procter & Gamble (PG) jumped 1-1/2 to 97-1/2 after reporting earnings excluding one-time charges of 88 cents a share for the latest quarter, matching Wall Street forecasts.
The maker of Tide detergent, Crest toothpaste and Pringles potato chips Monday broke off merger talks with drug makers Warner-Lambert Co. and American Home Products Corp.
Warner Lambert (WLA) was unchanged at 87-15/16 and American Home (AHP) dropped 2-1/16 to 40-1/2.
Among other companies not part of the Dow industrial average, Xerox Corp. (XRX) rose 3/16 to 21-15/16 after it narrowly beat lowered forecasts for the fourth quarter. The copier maker posted income from continuing operations of $294 million, or 41 cents a diluted share.
Texas Instruments (TXN) rose 3 to 113-7/8 after late Monday reporting a fourth-quarter profit increase of 71 percent, ahead of Wall Street's expectations. The semiconductor maker earned $433 million, or 51 cents per diluted share.
Merrill Lynch & Co. (MER) gained 5 to 80-11/16 after reporting record fourth-quarter profit that exceeded analysts' estimates. Income at the nation's biggest brokerage rose to a record $764 million, or $1.80 a diluted share.
(Click here for a complete look at the day's major earnings news)
(Click here for a look at CNNfn's hot stocks) 
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