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U.S. stocks soar
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June 26, 2000: 4:42 p.m. ET
Investors wait for Fed news; Philip Morris draws buyers in to lift the Dow
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - U.S. stocks rallied Monday as investors found buying opportunities in the consumer sector and pharmaceuticals, as anticipation reigned about what news would come from this week's Federal Reserve meeting.
Philip Morris and Johnson & Johnson sent the Dow Jones industrial average surging more than 1.3 percent, and selective tech buying boosted the Nasdaq composite index more than 1.7 percent.
After six interest rate hikes, investors are keeping their fingers crossed that the recent economic data will send out a signal that inflation is under control and prompt an end to rate hikes.
"There are no major positions being taken ahead of the Fed," said Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum. "I think people are just being very short-term oriented - you see a stock that has a good story and you invest. But you do have to be careful - you don't want to overstay your welcome in any stock."
 The Dow Jones industrial average jumped 137.54 points to close at 10,542.29. The Nasdaq composite index rose 66.39 to 3,911.73. The S&P 500 gained 13.97 to 1,455.45.
Market breadth was positive but volume was not strong enough to convince analysts that the rally was significant. Investors still were not buying or selling at a rapid pace, and some still opted to wait for the Fed meeting to pass before taking a stand.
 Advancers beat decliners on the New York Stock Exchange 1,482 to 1,352, as more than 884 million shares changed hands. Winners topped losers on the Nasdaq 2,136 to 1,880, on volume of more than 1.3 billion shares.
In currency markets, the dollar rose against the yen but slipped versus the euro. Treasury securities advanced slightly.
Dow buyers snap up Philip Morris, J & J
The Dow kept most of its gains, led by buying interest in Philip Morris, while positive comments and an upgrade from an analyst for Johnson & Johnson also helped lift the blue-chip index.
"Obviously the Dow is being helped by the strength in Philip Morris, along with Microsoft and Intel," said Peter Cardillo, director of research at Westfalia Investments. "It's an 'old economy'-'new economy' rally. But volume is not all that great, so obviously the market will continue to guess what the Fed will or will not do."
 Philip Morris (MO: Research, Estimates) jumped 3-9/16 to 27 after it agreed Sunday to buy Nabisco Holdings (NA: Research, Estimates) for $14.9 billion, or $55 a share, a premium of 6.5 percent over Nabisco's Friday closing price of 51-5/8, when it edged up 1/16. Nabisco rose 1-1/8 to 52-3/4 Monday afternoon.
The deal paved the way for R.J. Reynolds Tobacco (RJR: Research, Estimates) to buy holding company Nabisco Group Holdings (NGH: Research, Estimates), whose sole holding is an 80 percent stake in Nabisco Holdings. R.J. Reynolds shares gained 1-1/2 to 28-3/8 while Nabisco Group advanced 1 to 26-9/16.
Also leading the Dow higher, Johnson & Johnson (JNJ: Research, Estimates) gained 5-3/4 to close at 95-1/2, after PaineWebber upgraded the company to "buy" from "neutral." PaineWebber also said it "believes Johnson & Johnson's earnings will begin to outpace the market's beginning in the third quarter of this year."
Tech leaders helped prop up the Nasdaq. While Intel (INTC: Research, Estimates) fell 3/16 to 134-3/16, Oracle (ORCL: Research, Estimates) gained 3-3/16 to 82-11/16, Sun Microsystems (SUNW: Research, Estimates) jumped 3-7/8 to 90-7/16, and Microsoft (MSFT: Research, Estimates) rose 1-13/16 to 79-1/2.
 But selling took hold of the biotechs after Celera Genomics (CRA: Research, Estimates), together with the publicly funded Human Genome Project, announced at the White House Monday that it had created a "rough draft" of the human genome.
Celera's shares slumped 14-1/32 to 112-31/32. Other genomic firms also suffered. Lexicon Genetics (LEXG: Research, Estimates) slid 1-3/8 to 25-5/8 and Human Genome Sciences (HGSI: Research, Estimates) lost 2 to 143-3/8.
Analysts attributed the selling to the "buy on the rumor, sell on the news" phenomenon. Shares in genomics firms had gained buying attention for the past several weeks as the market waited in anticipation for news about a successful genome project.
Fed on the horizon
The Federal Open Market Committee, the Federal Reserve's monetary policy-making body, will meet Tuesday and Wednesday. While most analysts expect the Fed to leave interest rates unchanged, some suggest a quarter-percentage-point increase could be implemented.
"We believe the Fed is done," Bruce Steinberg, chief economist at Merrill Lynch, wrote in a note to clients. "But even if the Fed is done, it will continue to talk tough, stressing inflation risks, in part to keep markets from going to far too soon."
But investors are just biding their time ahead of any news from the meeting, analysts said. Investors also are placing more weight on what the Fed says rather than what it may do with regard to its interest rate policy at this time.
Analysts caution that investors should tread carefully in the current investment environment, at least until the Fed rhetoric is digested.
"It will be interesting to see how quickly the market goes to worrying about what the Fed will do in August," said Ehrenkrantz's Hyman. "We've just seen one month's statistics showing the economy is slowing."
Westfalia's Cardillo agreed. "It's a pick-and-choose market here. My thought is that (the Fed) is going to stay pat and they're going to use some tough language. We're going to see a vigilant Fed, and that should keep the markets on the defensive." 
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