MKt ignoring bad news
Sounds like a rally to me!
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Wednesday March 7, 8:50 am Eastern Time
Stocks May Open Firm After Bullish Call
By Denise Duclaux
NEW YORK (Reuters) - Stocks are poised for a firm start on Wednesday for the third straight session after one of Wall Street's most widely watched market strategists told investors that now is the time to funnel cash into equities -- the third bullish call by a market guru this week.
Goldman Sachs Chief Investment Strategist Abby Joseph Cohen joined Merrill Lynch's David Bowers and Morgan Stanley Dean Witter's Jay Pelosky in advising clients to buy U.S. stocks following weeks of sharp declines, a slide greased largely by chronic concerns about the soft economy.
Cohen's call comes one day after Intel Corp. (NasdaqNM:INTC - news), the world's No. 1 computer chip maker, and JDS Uniphase Corp. (Toronto:JDU.TO - news; NasdaqNM:JDSU - news), the world's No. 1 fiber-optic parts supplier, offered disappointing outlooks. Intel said it does not expect demand for chips to recover soon, while JDS cut its forecasts and blamed a slow U.S. economy and waning demand.
``Expectations are really at a lower level -- we continue to get bad news, but the market is not selling off on it,'' said Bryan Piskorowski, a market analyst at Prudential Securities.
With less than an hour to go before the opening bell, the Nasdaq 100 pre-market indicator rose 1.59 percent. Standard & Poor's 500 index futures gained 5.40 to 1,262.40. The Dow Jones Industrial futures jumped 32 points to 10,645.
Cohen told clients to use their cash to buy stocks, reversing the call she made in March 2000. Cohen, one of Wall Street's most respected strategists, raised the equity allocation in Goldman's model portfolio to 70 percent from 65 percent, and reduced the cash position to zero from 5 percent. She left the fixed-income portion alone.
``Many of the imbalances identified during the past year have now been largely redressed,'' Cohen said. ``Risk tolerance has been replaced by risk aversion.''
Moderate overvaluation of the S&P 500 has been followed by notable undervaluation, she added.
Investors will be tuning in to a live video presentation by Federal Reserve Chairman Alan Greenspan, but his speech on banking supervision to a conference in Las Vegas is unlikely to sway the markets. Greenspan said in Congressional testimony on Friday that he wanted to keep investors guessing on the timing of interest-rate moves.
On the data front, consumer credit data will be issued at 3 p.m. (2000 GMT). Consumer credit is seen rising to $6.5 billion from $3.0 billion in January.
The Federal Reserve will issue its latest Beige Book, a report based on anecdotal information from businesses and economists, at 2 p.m. EST (1900 GMT).
Neither data sets are expected to be a catalyst for the market.
In other corporate news, communications chip maker Broadcom Corp. (NasdaqNM:BRCM - news) cut its earnings and revenue outlook for the first quarter, hit by a slowdown in customer orders because of the sluggish economy.
Several computer-chip makers had warned about future results on Tuesday, but investors snapped up those shares in a bet the worst of the pain had been discounted.
``The one thing the market has been lacking is sustainability and follow-through,'' Piskorowski said. ``For two days we have had a rally and the key today will be whether we can work our way through the bad news and find some traction.''
Stocks rose on Tuesday, with the Nasdaq market posting its strongest rally in six weeks, as investors ignored corporate earnings warnings and snapped up technology shares in the bet they have scraped bottom.
Investors are betting the Federal Reserve will once again come to the rescue of the U.S. economy -- and the stock market -- with another interest-rate cut at its next policy-setting meeting on March 20. The central bank has already slashed the cost of borrowing by 100 basis points in two moves in January.
The Nasdaq Composite Index (.IXIC) closed up 61.51 points, or 2.87 percent, at 2,204.43, after jumping more than 4 percent early in the session. The rally, Nasdaq's second up day in a row, gave the index its best advance since Jan. 23 when it closed up 2.99 percent.
The blue-chip Dow Jones industrial average (.DJI) eked out a gain of 28.92 points, or 0.27 percent, to 10,591.22. A drop in defensive stocks as money flowed into the techs put a damper on the Dow's advance.
The broad Standard & Poor's 500 Index (.SPX) added 12.39 points, or 1.00 percent, to finish at 1,253.80.
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