<font color=blue>Market Snapshot--Dow, Nasdaq vault
P&G zooms; rally broad-based
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 4:00 PM ET Sep 28, 2000
NEW YORK (CBS.MW) - Putting aside earnings worries for a day, the market staged an incredible comeback Thursday that lifted almost all boats on Wall Street.
The broad-based rally helped all the major averages reap handsome gains, with an 8.7 percent rally in shares of Procter & Gamble propelling the Dow Industrials while chip and hardware stocks lit the Nasdaq's fire. And networking shares managed to flex their muscles despite a downgrade in shares of Cisco Systems.
"The pre-reporting season is about to conclude and this is a good way to kick off the start of the earnings season," said Art Hogan, chief market strategist at Jefferies & Co. "But we still have lots of lost ground to make up and we need to see follow-through to Thursday's positive action,' he added.
Inside the broad market, virtually all sectors scored big gains, with financials, biotech, utility, drug and retail shares pacing the advance. Only oil shares slumped as crude prices eased. The November contract slumped $1.12 to $30.34, giving the market yet another reason to cheer.
The Dow Jones Industrials Average ($DJ) surged 204 points, or 1.9 percent, to 10,834.
P&G (PG) surged 8.7 percent to $67.13 after reassuring investors of its profit outlook. The company believes it can achieve double-digit earnings-per-share growth year to year and said it expects sales growth of two to three percent for the fiscal year. The announcement is giving many old-economy companies - which have been battered in recent weeks due to concerns over the impact of the euro's woes and higher raw materials prices - a nice lift.
Also pushing the Dow solidly into the plus column were shares of United Technologies, Citigroup, American Express, AT&T, Honeywell and SBC Communications. Moving lower were shares of Eastman Kodak, Johnson & Johnson and General Electric.
"We're seeing some bargain hunting with restless rotation continuing. I can't read too much into this move, we need to demonstrate that we can keep these gains," said Bryan Piskorowski, market analyst at Prudential Securities.
The market's recent swings and travails have been tied to uncertainty over the magnitude of the economic slowdown. This has created sometimes violent day-to-day sector shifts as investors look to separate the wheat from the chaff.
"Hopefully, third-quarter earnings will be the market's upside catalyst as we wade through this seasonally soft period of the year," Piskorowski continued. "There's also a lot of cash sitting on the sidelines."
The Nasdaq Composite ($COMPQ) surged 86 points, or 2.4 percent, to 3,742 while the Nasdaq 100 Index ($NDX) tacked on 118 points, or 3.3 percent, to 3,690.
"We're seeing a bounce from oversold conditions, a snap back like this isn't surprising at all," said Terry Gabriel, market analyst at IDEAglobal.com. "But the prevailing trend remains down. There's still work to be done on the downside."
Gabriel believes the real test for the market will come when third-quarter earnings and the upcoming inflation figures - which will include the huge September gains in oil prices -- are unleashed.
The Standard & Poor's 500 Index ($SPX) put on 2.1 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks added 1.9 percent.
Separately, volume was very heavy, coming in at 1.14 billion on the NYSE and at 1.90 billion on the Nasdaq Stock Market. Breadth improved substantially as the day progressed, with winners outpacing losers by 17 to 10 on the NYSE and by 22 to 16 on the Nasdaq.
Sector movers
A call from Sanford Bernstein initially put pressure on networking stocks Thursday, but the group managed a swift recovery with the Amex Networking Index ($NWX) up 0.3 percent.. The firm lowered its rating on Cisco Systems and Nortel Networks to a "market perform" from "market outperformer." Cisco (CSCO) slipped $1.75 to $55.56 while Canada's Nortel added $2 to $61.63, relinquishing losses suffered out of the gate. See
Merrill Lynch's Broadband Holdrs (BDH), which includes Nortel, Ciena, Corning, JDS Uniphase and Lucent Technologies, added 2.1 percent, erasing earlier gains. Lucent saw the steepest gains after falling to fresh 52-week lows on Wednesday, climbing 9 percent to $31.50.
Over in the chip arena, Intel shares edged up 50 cents to $44.38. The stock (INTC) also gained ground on Wednesday after four straight days of losses.
A climb in shares of LSI Logic (LSI) also helped the semis. The company said it's comfortable with previous estimates of 10 to 12 percent revenue growth for the third quarter. LSI said its guidance already reflects decreased shipments in North America of Sony's PlayStation2 systems -- which were announced on Wednesday.
Xilinx (XLNX), meanwhile, which is a component of the Philadelphia Semiconductor Index ($SOX) alongside Intel and LSI Logic, got an upgrade from Chase H&Q to a "strong buy" from a "buy" rating." Shares rose 4.2 percent, or $3.31 to $83. The closely-watched SOX index gained 1.4 percent -- its second upside day in a row.
Merger news fueled the fire of financial shares Thursday, helping the S&P Bank Index ($BIX) score a 0.9 percent gain and the Amex Securities Broker/Dealer Index ($XBD) a 0.4 percent gain. Royal Bank of Canada announced it's buying regional securities firm Dain Rauscher (DRC) for about $1.46 billion in order to increase its presence in the U.S. market.
Internet stocks made an impressive move. Shares of Priceline (PCLN), hammered following a revenue warning, recovered a portion of Wednesday's losses, climbing 8.1 percent to $11.63. Yahoo (YHOO) jumped 7.2 percent to $96.88. Merrill Lynch said it remains confident in the company's third-quarter estimates but said the stock remains expensive. Still, Merrill said Yahoo remains a core holding for long-term investors. Both Salomon Smith Barney and USB Piper Jaffray reiterated their "strong buy" rating on the stock.
A rally in shares of Gateway highlighted action in the PC sector. The stock (GTW) rallied 14.2 percent to $56.02. Prudential Securities said shares have fallen on fears that the company may miss revenue estimates in the third quarter. But the brokerage said contacts within the company have given them confidence that revenues are on track. Prudential views current price levels as an excellent buying opportunity. The Goldman Sachs Hardware Index ($GHA) gained 2.9 percent.
Individual movers
Exodus Communications (EXDS) fell $6.13 to $47.13. Ending recent speculation, the company confirmed it's purchasing the web hosting unit of Global Crossing (GBLX), named GlobalCenter, in a stock deal valued at around $6.5 billion. The stock was cut to an "attractive" rating from a "buy" by PaineWebber. Global Crossing shares, meanwhile, climbed 88 cents to $30.75.
And Safeway (SWY) posted third-quarter earnings of 53 cents a share, surpassing the First Call estimate by a penny and ahead of the 44 cents made in the year-ago quarter. Shares shed 88 cents to $53.25.
Treasury action
Government prices improved marginally, with long-dated issues witnessing most of the buying interest ahead of the morning's buyback operation.
Treasury purchased $1.0 billion in 30-year issues Thursday, paying $1.30 billion for issues with maturities ranging from Feb. 2010 to Nov. 2014.
The 10-year bond gained 1/32 to yield ($TNX) 5.82 percent while the 30-year Treasury bond put on 1/4 to yield ($TYX) 5.89 percent.
Thursday's economic agenda included the release of the final revision to second-quarter gross domestic product. The figure was upwardly revised to show a 5.6 percent growth rate - a touch higher than economists had expected - versus the previously reported 5.3 percent rate.
In other news, weekly initial claims fell 24,000 to 287,000. View Economic Preview, economic calendar and forecasts and historical economic data.
In the currency arena, dollar/yen edged up 0.3 percent to 107.60 while euro/dollar added 0.2 percent to 0.8851. The fledgling currency has remained on a stable trajectory since last Friday's concerted intervention effort on the part of the European Central Bank, Federal Reserve and Bank of Japan to buy euros.
Observers say the central banks will be on alert to intervene again should Denmark decide not to join the single currency in the national referendum to take place Thursday. A "no" vote, in fact, is seen undermining the already waning confidence in the currency. |
