Stocks Strengthen After Bullish Call
Wednesday March 7, 1:03 pm Eastern Time
By Denise Duclaux
<<NEW YORK (Reuters) - Stocks strengthened on Wednesday, on track for a third straight winning session, as a closely watched Wall Street strategist told investors to funnel cash into the equities market.
Abby Joseph Cohen, Goldman Sachs' chief investment strategist, issued the third bullish call by a market guru this week, joining Merrill Lynch's David Bowers and Morgan Stanley Dean Witter's Jay Pelosky.
The strategists advised clients to buy U.S. stocks following weeks of weakness amid persistent fears over the nation's 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.
``You want to believe you have seen the worst, but anybody's predictions are a leap of faith,'' said Dick Schmaltz, director of investment at J. & W. Seligman Inc., which oversees $34 billion. ''On the one side, operating fundamentals continue to deteriorate. On the other side the market has been correcting now for almost a year.''
The Nasdaq Composite Index (.IXIC) rose 20.17 points, or 0.91 percent, to 2,224.60, after earlier jumping almost 2 percent. Intel led the technology-stacked index higher with a $1-3/8 jump to $32-7/8, despite saying it does not expect chip demand to recover quickly.
The Dow Jones industrial average (.DJI) gained 83.41 points, or 0.79 percent, to 10,674.63, after rising more than one percent earlier. Intel and retailers Home Depot Inc. (NYSE:HD - news), up $1.90 to $43.26, and Wal-Mart Stores Inc. (NYSE:WMT - news), up 75 cents to $50.30, helped lift the blue-chip average.
The broader Standard & Poor's 500 Index (.SPX) rose 5.84 points, or 0.47 percent, to 1,259.64.
The market had eased a bit after shares of Internet portal Yahoo! Inc. (NasdaqNM:YHOO - news) were halted shortly after the start of Nasdaq trading for news pending. Representatives of the company were not immediately available for comment. Before the halt, its shares had fallen $1-13/32 to $20-31/32, the lowest since September 1998.
``This market is still trying to build some kind of base. It's not ready to fly off the launch pad,'' said Guy Truicko, portfolio manager of Unity Management, which oversees $1 billion.
Cohen, one of Wall Street's most respected strategists, helped to spark a rally after telling clients to use their cash to buy stocks. Last March, she had cut her recommended position in technology stocks.
Cohen, in a note to clients on Wednesday, 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.
Investors will be tuning in to a live video presentation by Federal Reserve Chairman Alan Greenspan at 3:10 p.m. (2010 GMT), 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.
JDS Uniphase slipped 11/16 to $27-5/16, after lowering its forecasts again, citing a weakening U.S. economy and waning customer demand.
Communications chip maker Broadcom Corp (NasdaqNM:BRCM - news) slumped $6-1/4 to $41-5/8 after cutting its earnings and revenue outlook for the first quarter, due to a slowdown in customer orders.
WorldCom Inc. (NasdaqNM:WCOM - news), the No. 2 U.S. long-distance phone company, rose 13/16 to $17-1/2 after The Wall Street Journal reported the company could be interested in selling itself.
Pharmaceuticals giants Merck & Co. (NYSE:MRK - news), down $2.23 to $74.88, and Johnson & Johnson (NYSE:JNJ - news), off $1.51 to $95.29, weighed on the blue-chip Dow as investors shifted out of those names amid continued gains in the tech sector.
Electronic components manufacturer CTS Corp. (NYSE:CTS - news) tumbled $11.88 to $26.02 after warning that earnings would be lower than expected because a slowdown in U.S. consumer spending has led to a pile-up in inventories.
Barrett Resources Corp (NYSE:BRR - news) jumped $14.73 to $60.35 after oil giant Royal Dutch/Shell Group announced plans to acquire the U.S. natural gas producer for $2.2 billion, including $400 million in debt.>> |
