|
Wall St. sizzles in August
|
 |
August 31, 2000: 5:26 p.m. ET
Dow, Nasdaq rise as money chases recent winners ahead of jobs data
By Staff Writer Jake Ulick
|
NEW YORK (CNNfn) - U.S. stocks soared Thursday, capping off a strong August on Wall Street as investors snapped up many of the month's best-performing shares.
Four weeks of incremental gains gave way to one of the summer's sharpest advances, led by technology and financial shares.
Lifted by a surge in J.P. Morgan, the Dow Jones industrial average climbed more than 100 points Thursday to finish up 7 percent in August. And the Nasdaq composite index, after advancing nearly every day this month, rose 2.5 percent on strength in Intel, Cisco Systems and Oracle. The index ended up 11.5 percent on the month.
Many analysts linked the gains, which faded somewhat by day's end, more to forward momentum than any new developments in the state of the economy or the outlook for earnings.
"I think it's more a result of a fear of buyers being left behind," said Richard Cripps, chief market strategist at Legg Mason.
Still, Ralph Acampora, chief technical analyst at Prudential Securities predicts that after a tough first half, the rest of 2000 will be a good one for stocks now that the Federal Reserve appears done raising interest rates.
 "It's been a great month," Acampora told CNN's Street Sweep. "I think September will be fine."
The day's buying, which started at the market's open, accelerated after two economic reports crossed the wire. Factory orders and manufacturing in the Chicago region showed surprising weakness, reviving hope that the Federal Reserve won't raise borrowing costs for the rest of the year.
A trio of profit warnings from retailers weighed on Gap, Target and J.C. Penney, but failed to hurt the major indexes.
By day's end, the Nasdaq rose 102.53 points, or 2.5 percent, to 4,206.34, its highest close since July 17.
The Dow, meanwhile, jumped 112.09 to 11,215.10. And the S&P 500 added 15.09 to 1,517.68, climbing 6 percent in August.
The strength turned a typically quiet pre-jobs report Thursday into one of the busier trading sessions in months. The government's August payroll data comes Friday before the markets open.
 More stocks rose than fell. Advancing issues on the New York Stock Exchange topped declining ones 1,710 to 1,133 on volume of more than 1 billion shares. Nasdaq winners beat losers 2,479 to 1,600, as more than 1.8 billion shares changed hands.
In other markets, Treasury securities rose. The euro fell to a record low against the dollar, but the U.S. currency declined slightly versus the yen.
J.P. Morgan, techs gain
Among the most dramatic advancers was Dow component J.P. Morgan (JPM: Research, Estimates), which climbed $15.31 to $167.19, a 52-week high. The stock, along with others in the financial sector, has gained on merger speculation. That speculation mounted after Credit Suisse Group Wednesday made a $15.5 billion takeover offer for Donaldson, Lufkin & Jenrette. Lehman Brothers (LEH: Research, Estimates) and Bear Stearns (BSC: Research, Estimates) also hit their highest levels in 12 months Thursday.
Among Nasdaq's biggest movers, Intel (INTC: Research, Estimates) added $1.38 to $74.88, Oracle (ORCL: Research, Estimates) rose $2.69 to $90.94, and Cisco Systems (CSCO: Research, Estimates) gained $1.94 cents to $68.50.
 Boosting the Dow, IBM (IBM: Research, Estimates), after falling $2.56 Wednesday, jumped $1.69 to $132.00. And Hewlett-Packard (HWP: Research, Estimates) gained $3 to $121.
But retail was the market's soft spot after a series of high-profile companies warned of profit disappointments ahead. Among them, Gap (GPS: Research, Estimates) fell 6 cents to $22.44. The company said August sales at its stores open at least a year fell 14 percent and warned that "risks" lie ahead in the fiscal third and fourth quarters. At least five brokerage downgrades followed.
J.C. Penney (JCP: Research, Estimates), meanwhile, prepared analysts for fiscal third-quarter earnings that may fall short of estimates. Its shares lost $1.19 to $14.00.
And Target Corp. (TGT: Research, Estimates) said it expects a slight decline in its third-quarter earnings per share because of slower-than-expected sales during August. Its shares were discounted $2.81 to $23.25.
The news comes amid a tough time for retailers. Stocks such as Wal-Mart (WMT: Research, Estimates) and Home Depot (HD: Research, Estimates) have tumbled in recent weeks on concern that a slowing economy will hit profits at businesses sensitive to consumer spending.
Gregg Hymowitz, money manager at EnTrust Capital, worries if the economy cools too rapidly the entire market may suffer.
"If the economy slows down too much, this is not going to be good for stocks," Hymowitz told CNN's Street Sweep.
Data shows weakness
In one sign of that slowing, factory orders fell 7.5 percent in July, the largest drop on record, according to a report by the Commerce Department. Analysts surveyed by Briefing.com forecast factory orders would fall just 6.1 percent.
Separately, the Chicago Purchasing Management Index (PMI) that measures manufacturing fell to 46.5 in August from 52 in July. The prices paid component -- a measure of inflation -- fell to 58.6 in August from 70 in July.
"These data add to the growing evidence that economic activity has slowed and that any re-acceleration is likely to be short-lived," said Steven Wood, economist at Bank of America.
 While the news is good for investors hoping for a break from rising interest rates, most on Wall Street are focused on Friday. That's when the Labor Department releases August jobs figures.
The numbers could gauge whether the nation's tight labor market, with unemployment hovering near a 30-year low, is loosening as the economy slows. The Federal Reserve left interest rates unchanged last week after tightening credit six times since June 1999.
The jobs figures, which frequently move the markets, won't change one fact: August has been a strong month for U.S. stocks.
But Greg Nie, technical analyst at First Union Securities, told CNNfn's market coverage that the current run-up faces a stern test once investors come back from the Labor Day holiday. (407K WAV) (407K AIFF) 
|
|
|
|
|
 |
|
