Stocks Rise, Wall St. Eyes Vote, Rate Cut
2 hours, 11 minutes ago
URL:http://story.news.yahoo.com/news?tmpl=story2&cid=568&ncid=749&e=1&u=/nm/20021105/bs_nm/markets_stocks_dc
By Haitham Haddadin
NEW YORK (Reuters) - Blue-chip stocks led Wall Street higher on Tuesday amid news of modest growth in the vast U.S. services sector, but investors marked time for most of the day, awaiting a possible interest-rate cut and the results of the day's voting in U.S. elections.
Technology stocks eked out gains in the final hour, helped by a rally in Cisco Systems Inc. (NasdaqNM:CSCO - news), which is scheduled to report its earnings after the market's close on Wednesday.
Tech stocks were weaker for most of the session after news of jobs cuts at Applied Materials Inc. (NasdaqNM:AMAT - news). Sending a chill for tech stocks was Lehman Brothers' cautioning investors against betting on a swift upturn in the computer-chip equipment sector.
"With this end-of-day rally, people are just looking forward to Cisco's earnings tomorrow and the rate cut," said Kevin Cohen, trader with Wedbush Morgan. "Also the recent trend is up, so people are looking forward."
The blue-chip Dow Jones industrial average (^DJI - news) rose 106.67 points, or 1.24 percent, at 8,678.27, according to the latest available data. The S&P 500 (^SPX - news) was up 7.04 points, or 0.78 percent, at 915.39, having traded almost unchanged most of the day. The tech-laden Nasdaq Composite (^IXIC - news) added 4.63 points, or 0.33 percent, to 1,401.17, after spending most of the session in the loss column.
Most companies in the Standard & Poor's 500 have issued third-quarter results, but investors still await a few key ones such as Cisco's. The Web gear giant was the most actively traded issue on Nasdaq and helped keep a floor under the tech market, gaining more than 3 percent.
On the data front, the Institute for Supply Management said its monthly index of non-manufacturing activity fell in October to 53.1 from 53.9 in September, above forecasts for a decline to 51.7. A number above 50 indicates growth in the services sector, which makes up roughly 80 percent of the U.S. economy.
Investors shied away from making big bets until the results of Tuesday's U.S. midterm elections were known and after Wednesday's decision by the Federal Reserve (news - web sites) on interest rates. The Fed is widely expected to reduce short-term rates by a quarter of a percentage point.
"The market is treading water ahead of the elections and tomorrow's Fed meeting," said Alan Ackerman, market strategist at Fahnestock & Co. "There are scenarios out there that traders have prepared for. If there's a Republican win, there are opportunities to be found in tobacco, health-care and large-cap pharmaceuticals."
A Republican win, he said, could mean the passage of an energy bill and homeland security improvements. Also on Wall Street's mind is the talk of "the president changing his economic team after the election," added Ackerman.
Stocks have rallied for more than four weeks after the Dow average and the S&P 500 hit 5-year lows and the Nasdaq struck a 6-year low in early October.
The Dow average got a lift from aerospace giant Boeing Co. (NYSE:BA - news), up $1.85 at $31.52. A Boeing spokesman said the company hopes to close a deal to lease modified 767 jetliners as refueling tankers to the U.S. Air Force by year end, but noted it was still negotiating with the U.S. government.
The cautious tone from Lehman Brothers on the chip equipment stocks weighed on tech names across the board.
"While we agree that it is generally profitable to invest in equipment shares at 'the darkest hour,' we believe the semi equipment industry has not yet reached that period of time," Lehman said in a research note.
Applied Materials, the leading chip gear maker, slipped 64 cents to $15.81, or 3.9 percent. Applied Materials will slash about 11 percent of its work force in a move to combat a nearly 2-year-old slump in microchip demand, the company has said.
Intel Corp. (NasdaqNM:INTC - news), the world's biggest manufacturer of computer chips, slid 38 cents to $18.35. The Philadelphia semiconductor index (^SOXX - news) shed 2.66 percent.
Cisco wobbled but closed up 38 cents at $12.69. The outlook given by the giant maker of Web routers will be crucial to investors looking for a recovery in the beaten-down sector.
American Express Co. (NYSE:AXP - news) lost 93 cents to $36.60, or 2.5 percent. Merrill Lynch cut the Dow stock to "neutral" from "buy," saying it was pricey.
Aon Corp. (NYSE:AOC - news) rose $1 to $18.18. The No. 2 U.S. insurance broker said it privately sold $250 million of 10-year senior notes convertible into company stock as part of its bid to raise $800 million in the stock and convertible markets.
Advancing stocks were about equal to decliners on the New York Stock Exchange (news - web sites) and the Nasdaq. More than 1.3 billion shares changed hands on the Big Board and more than 1.6 billion on Nasdaq in active trade.
The market was watching congressional and gubernatorial races between Republicans and Democrats. The former will determine which party controls Congress for the next two years.
"The implications for investors are huge," said Frederic Dickson, chief strategist at D.A. Davidson & Co. Bills to eliminate double taxation on dividends or cut the capital gains tax are being held up by current committee chairmen in the Democratic-controlled Senate. |
