To make amends for getting the market time mixed up (EST and PST~~really did, it's been a busy busy day for me) thought you'd be interested in this article overall....
NEW YORK (Nov. 6) - Stocks capped off a seesaw session with a late rally on Wednesday after the Federal Reserve surprised investors with a hefty interest-rate cut and a sweeping Republican election victory stirred hopes for a business-friendly administration.
"We have removed some uncertainty from the equation with the election and the Fed, and people want to buy stocks right now," said Richard Cripps, chief market strategist at Legg Mason Wood Walker. "Both of those things have been resolved in a way that, at least on the surface, are favorable to stocks."
The technology-loaded Nasdaq Composite index climbed 17.82 points, or 1.27 percent, at 1,418.99, scoring its sixth straight session of gains. The blue-chip Dow Jones industrial average rallied 92.74 points, or 1.07 percent, to 8,771.01. The broad Standard & Poor's 500 advanced 8.37 points, or 0.91 percent, at 923.76, according to the latest available numbers.
The Fed slashed interest rates by a half-percentage point, bringing borrowing costs to a fresh 40-year low. Policymakers signaled they would likely stand pat for now after the reduction, explaining that risks to the economy were balanced between weakness and inflation.
The jumbo cut caught Wall Street by surprise and stocks initially rose, then fell, and rose again. Many investors had expected a smaller, quarter-percentage point cut and debated whether the big cut spelled a healthier economic rebound or signaled an economy in surprisingly poor health.
"I think that after a rally over a day or two investors will start to question what is the real status of the economy," said Peter Cardillo, chief strategist at Global Partners Securities.
Defense and pharmaceutical stocks boosted the market as investors bet Republican control of Congress will mean more money for the military and fewer regulations on drug makers. But the session had its sore spots, as biotechnology giant Amgen Inc. and data storage networking company Brocade Communications Systems Inc. sank after sour broker calls.
Advancers beat out declining stocks by a ratio of 2 to 1 on the New York Stock Exchange and 7 to 4 on the Nasdaq. More than 1.63 billion shares traded hands on the Big Board and more than 2.15 billion shares on Nasdaq in active trading.
"Stocks will get the benefit of the doubt as there is a lot of stimulus in the pipeline," said Peter Boockvar, equity strategist at Miller Tabak & Co. "A lot of the weak economic data will be overlooked on the assumption that the cuts, both today's and previous ones, will eventually have a positive impact on the economy."
The market is working on its fifth straight week of gains as many investors bet corporate profits are on the mend despite an economy struggling to gain momentum.
Investors hoping the market has scraped bottom got an added boost after Tuesday's midterm elections gave Republicans control of the Senate and widened their margin in the House of Representatives. Republicans are viewed as more friendly to business, and their victory could make tax cuts more likely.
Web gear giant Cisco Systems Inc. could grab the spotlight on Thursday. Cisco rose 27 cents to $12.96 and was the Nasdaq's most active share ahead of its quarterly results after the closing bell. Cisco headed up to $13.53 after posting a quarterly profit that beat estimates by a penny.
Amgen sank $3.87, or more than 7 percent, to $46.21. Investment bank UBS Warburg cut its rating on the world's biggest biotechnology company to "hold" from "buy," citing concerns over its key products.
Brocade tumbled $1.01, or more than 13 percent, to $6.40. Bear Stearns downgraded Brocade, citing concerns over intensifying competition. Wall Street also fretted about Brocade's deal to buy private Rhapsody Networks in a stock transaction originally valued at $175 million.
Helping buoy the blue-chip Dow were pharmaceutical stocks like Merck & Co. and Johnson & Johnson. Goldman Sachs raised its rating on the sector to "neutral" from "cautious," saying the Republican victory is likely to ease regulatory pressures somewhat. Merck rose $1.80 to $56, while Johnson & Johnson gained 38 cents at $60.27.
Defense stocks climbed as investors bet that the Republican sweep of Congress would translate into steady profit growth for the sector. Dow member Boeing Co. added $2.06, or more than 6 percent, to $33.58 and led the Dow higher. Goodrich Corp. jumped 87 cents, or more than 5 percent, to $16.43. Raytheon Co. gained $1.10, or more than 3 percent, to $30.37.
Companies facing asbestos-related liabilities rose on hopes that a Republican-controlled Congress would pass legislation reining in an explosion in asbestos lawsuits against corporations. A rush of asbestos personal injury claims has cost more than $54 billion in settlements so far and driven more than 60 U.S. companies into bankruptcy.
Halliburton Co. gained $1.67, or more than 10 percent, to $17.95. Honeywell International climbed $1.29, or 5 percent, to $27.08. Georgia-Pacific Corp. surged $1.67, or more than 12 percent, to $15.42. Sealed Air Corp. added $1.75, or more than 10 percent, to $18.03.
The market shrugged off news that Harvey Pitt, embattled chairman of the U.S. Securities and Exchange Commission, had resigned. Pitt has been engulfed in controversy since he took over as chairman of the securities watchdog 15 months ago.
16:58 11-06-02 |
