graphic
Markets & Stocks
Big gains on Wall St.
April 5, 2001: 4:36 p.m. ET

Broad-based rally led by good news from Dell Computer and Alcoa
By Staff Writer Catherine Tymkiw
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - U.S. stocks surged Thursday as investors poured money into all sectors after positive guidance from Dell Computer, strong earnings from aluminum maker Alcoa, and revived confidence in the economy rekindled optimism.

The Dow Jones industrial average rallied more than 400 points, its second-largest point gain ever. The Nasdaq composite index soared more than 140 points, gaining nearly 9 percent, its third-largest percentage gain.

The gains were not unexpected. They come after a week of worries that companies would not meet bottom line expectations in a slowing economy which led to heavy selling across all sectors.

graphic"We were set up for a rally because stocks were under tremendous pressure and I think some people are doing bottom fishing," Walter Price, who runs the Dresdner RCM Global Technology Fund, told CNNfn's Street Sweep.

While the buying gained strength and volume rose, analysts said investors should remain somewhat cautious there needs to be more evidence of sustainability to be convincing.

The Nasdaq rose 146.20 points, or 8.92 percent, to 1,785. But the tech-heavy indicator still is hovering around 29-month lows and is down 65 percent from its March 10, 2000, high of 5,048.

graphicThe Dow rallied 402.63, or more than 4 percent, to 9,918.05. While the blue chip index set a point-gain record, the indicator is still down 15 percent from its Jan. 14, 2000 high of 11,722. The Standard & Poor's 500 rose 48.19 to 1,151.44 and is down 25 percent from its March 23, 2000, high of 1,527.

"It's not necessarily a sign of good things to come. But it's a rally from a deeply oversold condition so it raises hopes that there may be some follow through," said Alan Ackerman, senior vice president with Fahnestock & Co. "We're not yet in the midst of rally that shows signs it is sustainable."

In the day's economic news the number of claims filed for unemployment surged, but soothing comments from Federal Reserve governors gave investors some comfort. Still, market participants are trying to gauge how aggressive the Fed will be with its interest rate policy.

Investors will have further information to digest before the market opens Friday when the Labor Department issues its March employment report.

"While this market is starved for good news, it is still nervous -- if we don't see favorable numbers tomorrow it could be a negative," Walt Czaicki, senior portfolio manager with Banc of America Capital Management, told CNNfn's Street Sweep.

Market breadth was positive. On the Nasdaq winners beat losers 2,854 to 870 as more than 2.3 billion shares changed hands. Advancers outpaced decliners on the New York Stock Exchange 2,320 to 746 as more than 1.3 billion shares were traded.

In other markets, Treasury securities edged lower. The dollar slipped against the euro but rose versus the yen.

After the beating come the bargains

A daily influx of bad news -- from earnings warnings to signs of further economic slowing -- has prompted heavy selling in recent days. Analysts said the battering across all sectors created broad buying opportunities, and the optimism gained momentum as several leading companies had good news.

"We took a piece of information last night coming out from Dell Computer that six months ago might have had the market down and chose that as a catalyst to rally," Charles White, portfolio manager with Avatar Associates, told CNNfn's The Money Gang.

The question remains: Have stocks touched bottom yet? "I think Wall Street is as out of its mind here on the bear side as it was a year ago on the bull side," said John Manley, investment strategist with Salomon Smith Barney. "I've seen too many rallies that were going to be 'The Bottom' that didn't work out."

Still, Manley suggested the markets will make an attempt to hold their footing over the next couple of weeks. "It's not just a function of being cheap enough, it's a function of sentiment being down as much as it is," he said.

Tech surge led by Dell

The major indexes have fallen to levels perceived by analysts as investment opportunities -- but it took more than just low prices to attract buyers. Investors perked up after a slew of good news offset the recent negativity that had been keeping money on the sidelines.

"The rapid rise does tell you something that we know already -- the market is so starved for good news that it doesn't take much for the market to go up," Salomon's Manley said.

graphicDell Computer (DELL: up $3.00 to $25.19, Research, Estimates) revealed late Wednesday that it expects to meet fiscal first-quarter profit and revenue forecasts. The fact that it isn't reducing its outlook apparently is encouragement enough for investors who have been battered in recent weeks by tech company warnings. Dell doesn't have guidance for what's going to happen in the rest of the fiscal year.

Yahoo! (YHOO: up $2.81 to $15.25, Research, Estimates), the Internet search portal, was raised by Lehman Brothers to "buy" from "market perform."

At the Comdex technology conference, Sean Maloney, executive vice president at Intel, made positive comments about the future of computing.

  graphic COMDEX TECH CONFERENCE  
    Click below for a comprehensive look at what people are talking about at the convention
  • Comdex
  •    
    "I am not here to bury the PC, but to praise it," Maloney quipped during a keynote presentation. Intel (INTC: up $3.00 to $25.62, Research, Estimates) -- the world's largest supplier of microprocessors for personal computers -- has been locking in on the market for chips used in other devices, such as handheld computers and a range of communications gear.

    Gainers in the chip sector included Applied Materials (AMAT: up $4.44 to $42.25, Research, Estimates) and KLA Tencor (KLAC: up $4.44 to $37.19, Research, Estimates).

    In the broader tech sector, advances were led by Microsoft (MSFT: up $4.81 to $56.75, Research, Estimates), IBM (IBM: up $6.21 to $98.21, Research, Estimates), JDS Uniphase (JDSU: up $2.47 to $16.19, Research, Estimates) and Cisco Systems (CSCO: up $1.25 to $14.94, Research, Estimates).

    Cisco also said late Wednesday that slow sales of an optical router had prompted it to discontinue making that device, the company's latest step into the fast-growing metropolitan-area networking market.

    graphicEarnings and sales warnings from technology firms were shrugged off.

    Akamai Technologies (AKAM: up $1.50 to $7.50, Research, Estimates), the maker of  multimedia software for the Web, said that while first-quarter revenue will be below expectations, its loss for the quarter will be less than expected.

    Emulex (EMLX: up $4.50 to $17.00, Research, Estimates) warned Thursday that it will miss earnings and sales forecasts for its recently completed third quarter because customers deferred orders during the period.

    Alcoa leads Dow's rise

    The rally wasn't confined to technology. Alcoa's strong earnings provided enough fuel for industrial and other cyclical issues to attract buyers.

    Dow component Alcoa (AA: up $1.95 to $37.50, Research, Estimates) beat expectations for a first-quarter profit, posting earnings of 46 cents a share, versus the 43 cents forecast by analysts and the 47 cents earned a year earlier.

    Other leaders on the Dow included 3M (MMM: up $4.61 to $103.23, Research, Estimates), Boeing (BA: up $2.18 to $56.81, Research, Estimates) and United Technologies (UTX: up $3.75 to $75.15, Research, Estimates).

    Bed, Bath & Beyond (BBBY: up $2.31 to $26.94, Research, Estimates), the home products retailer, reported a 33-percent jump in fourth-quarter earnings after the closing bell Wednesday, edging Wall Street estimates by a penny a share on rising sales.

    But at least one dark cloud still hovered. FedEx (FDX: down $0.63 to $38.97, Research, Estimates), the package delivery service, said late Wednesday that fiscal fourth-quarter earnings will be lower than expected due to reduced use of its services in the economic downturn.

    Jobless claims surge

    The number of new jobless claims in the United States rose to its highest level since July 1998, the government reported Thursday, with the figure topping economists' forecasts. The U.S. Labor Department said 383,000 new claims for state unemployment benefits were filed in the week ended March 31, up 18,000 from a revised 365,000 in the prior week. A consensus of economists had expected of 372,000 claims for the week, according to Reuters.

    Market participants will be keenly waiting for the March employment data, which will be reported by the Labor Department Friday before the U.S. stock markets open.

    Expectations are for the unemployment rate to edge higher to 4.3 percent, with nonfarm payrolls rising by a modest 70,000, according to analysts polled by Briefing.com.

    "We had an indication today that the unemployment numbers may be up a bit," Fahnestock's Ackerman said. "Lots of eyes will be on the employment numbers tomorrow (Friday) with the hope that the jobless market will ease just a bit and price pressures may ease along with them."

    But Goldman Sachs analysts said that 60 percent of the indicators they use for gauging the economy still point to a recession starting within the next six months. The indicators they use include stock prices and initial unemployment claims.

    Goldman said there is a 61 percent probability of a recession and that it will take aggressive easing of interest rates by the Federal Reserve to avoid a slump. graphic





    graphic

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.