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Techs drive Nasdaq up
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December 1, 2000: 4:47 p.m. ET
Modest recovery for beaten-down index; Dow ends day and week modestly lower
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - One day after tumbling to its lowest close in 15 months, the Nasdaq composite index snapped a four-session losing streak Friday, clawing back into positive territory Friday, led by cautious buying in the beaten-down technology sector.
The major U.S. indexes rallied for most of the session, before selling came in midday to temper the Nasdaq's gains and send the Dow Jones industrial average to a negative close. The economic deceleration, the Federal Reserves stance on interest rates and election uncertainty still are concerns.
 "We saw a lot of buying coming in this morning but it was more of a short covering rally than new money coming in. But there are nervous things going on – the election, the Fed, and these are all issues that are weighing on the market right now," Lewis Borsellino. CEO of TeachTrade.com, told CNNfn's market coverage.
Explaining the late sell-off, Borsellino said, "I really think this is really healthy for the market – technically I'm looking for this market to start building a bottom and the catalyst will be if the Fed comes out and says it is neutral.
The Nasdaq tempered a 5 percent gain but still managed to eke out a modest gain of 47.36 points, or 1.82 percent, to 2,645.29. The gains weren't enough to drag the beaten up index out of its demise for the week – the composite is down 8.9 percent this week.
 The Dow Jones industrial average gave up its gains by midday, falling 40.95 to 10,373.54, and the blue chip index is off a modest 0.9 percent for the week, while the S&P 500 was little changed, advancing 0.28 to 1,315.23.
Once the Dow started falling, unnerved investors, anxious over ongoing election and economic uncertainty, began shedding some tech gains.
"Until we get rid of this political uncertainty, there's no chance we'll have a rally, but even when that happens there's this underlying economic uncertainty," said Peter Coolidge, senior trader with Brean Murray & Co. "There's more volatility ahead."
Market breadth was positive. Advancers beat decliners on the New York Stock Exchange 1,900 to 986, as more than 1.1 billion shares were traded. On the Nasdaq, winners topped losers 2,462 to 1,494, as more than 2.2 billion shares changed hands.
In other markets, Treasury securities were mixed. The dollar faltered against both the euro but gained versus the yen.
Will there ever be a bottom?
This isn't the first time stocks started a recovery after a hefty sell-off, only to give back the gains. Investors have been hoping for a fourth-quarter rally and banking on a bottom to signal a good time for buying.
"It does look like we reached a shorter-term capitulation but I don't think sentiment ever got negative enough to suggest an absolute low," said Terence Gabriel, stock market strategist at IDEAglobal.com.
 Revenue warnings were the catalyst behind the heavy selling on the last day of November, which sent investors scurrying for the exits. Analysts are hoping the markets will start to move higher but uncertainties continue to cloud the outlook and a searing year-end rally seems unlikely.
One analyst advised it would be more prudent to re-enter the market cautiously but advised investors to forget about picking the exact level to pour money back into any one sector.
"You wouldn't want to try to predict when it will be sustainable. You're not going to predict a bottom until after the fact," David Katz, stock analyst with Matrix Asset Advisors, told CNNfn's Talking Stocks.
Economic reports showing a continued slowdown and the uncertainty about the election haven't helped the churning. Among the factors affecting the market were a report of continued contraction in the manufacturing sector and a U.S. Supreme Court hearing concerning the presidential stalemate.
Analysts say that U.S. stocks will react positively once the election is decided and the economic slowing could prompt the Federal Reserve to take on a neutral stance at its next monetary policy meeting Dec. 19.
"A change of Fed bias with no change in rates or a change of bias with a cut in rates would both be positive catalysts," wrote Christine Callies, chief U.S. investment strategist with Merrill Lynch, in a note to clients. "Once the uncertainty has been resolved, we expect leadership to broaden to include a broad array of growth cyclicals, including technology, high-quality consumer cyclicals, medical technology, technology hybrids in capital goods, and utilities."
Cautious buying in tech-land
One day after taking a severe beating, technology stocks in every sector attracted buyers, with hardware and networking providers leading the way, but analysts say "proceed with caution."
"That kind of capitulatory downside will lead to bounces, but the question is sustainability and follow-through," said Bryan Piskorowski, market analyst at Prudential Securities. "That's something the market has been unable to demonstrate any credibility in doing so over the last three months."
But Wall Street seemed divided about how much uncertainty is really weighing on the market, with David Spika, portfolio manager with Banc of America Capital Management, telling CNNfn's In the Money that the reality which has put a damper on the tech stocks for much of the year now works in favor of the sector. (395K WAV) (395K AIFF)
 Sun Microsystems (SUNW: Research, Estimates) rose 88 cents to $76.94, Qualcomm (QCOM: Research, Estimates) jumped $2.75 to $83, and Cisco Systems (CSCO: Research, Estimates) advanced 63 cents to $48.50.
Cisco's gains were helped by ABN Amro analyst Kenneth Leon, who reiterated his "buy" rating on the top networking equipment maker ahead of Cisco's scheduled meeting with analysts next week.
The Dow was helped by some of the tech bargain hunters. IBM (IBM: Research, Estimates) rose $2.13 to $95.63 and Hewlett-Packard (HWP: Research, Estimates) gained 56 cents to $32.19.
 The tech gains weren't enough to keep the Dow in positive territory. Offsetting the Dow's gains, Johnson & Johnson (JNJ: Research, Estimates) fell $2.25 to $97.75, Merck (MRK: Research, Estimates) shed $2.06 to $90.63, and Intel (INTC: Research, Estimates) lost $3.94 to $34.13 after Credit Suisse First Boston cut its earnings estimate for the chipmaker.
Election impasse and a cooling economy
The latest economic reports continue to point to an economic slowdown that may hurt corporate profitability if the slowdown is exacerbated. Also keeping investors skittish is the election impasse, draping the market with uncertainty.
In the day's economic news, the National Association of Purchasing Management's manufacturing index for November fell to 47.7 percent from 48.3 percent in October and short of the expected 48.5 percent.
A reading under 50 percent indicates contraction in the manufacturing sector – something some analysts hope will lead the Federal Reserve to consider interest rate cuts sooner rather than later.
"We're hoping for the 'bad news is good news' syndrome -- that we will continue to see signs of a slowing economy and that will make the Fed more accommodating," Piskorowski said. Initial November vehicle sales reports also hinted at a slowing economy. Ford sales fell 7 percent while Chrysler sales dropped 5 percent. Analysts polled by Briefing.com expect auto sales to come in at an annual rate of 6.5 million units, down from 6.6 million in October.
 Another factor with the potential to weigh on stocks is the ongoing presidential election stalemate. Friday's main event was a U.S. Supreme Court hearing on the George W. Bush campaign's move to have results from hand recounts in some Florida counties thrown out.
Bush wants the high court to overturn a Florida Supreme Court decision last week that went in favor of Al Gore's effort to claim the White House. The justices were considering what action, if any, to take. 
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