Market Update

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Market Update: Dow Leading the Charge Higher, Nasdaq Tags Along

Kristen French

The major indices were all over the place this morning, with the Nasdaq Composite Index lately tossing on either side of the flatline, and the Dow Jones Industrial Average making some solid headway into the green.

At least one trader said he didn't think any trend would establish itself until after 10:30 a.m. EDT.

"The open is just a poker game," said Sam Ginzburg, senior managing director of equity trading at Gruntal..

Major Indices INDEX CHANGE % VALUE Dow 108.39 1.02% 10,736.75 S&P 500 17.83 1.25% 1444.40 Nasdaq 31.46 0.86% 3687.76 Russell 2000 2.72 0.54% 510.85 TSC Internet 18.96 2.73% 713.47 NOTE CHANGE PRICE YIELD 10-Year Treasury -- 99 14/32 5.825% Market data as of: 11:05 a.m. EDT, Sept. 28, 2000

Sanford Bernstein's downgrade on optical stocks Cisco(CSCO - Cramer's Take - Stockpickr) and Nortel Networks(NT - Cramer's Take - Stockpickr) this morning sank the tech-heavy Nasdaq right out of the gate. Cisco was lately down 3.2%, while Nortel was down 1.3%.

Bernstein blamed the downgrade on concerns of a slowdown in spending on telecommunications equipment, spreading Cisco and Nortel's pain to other fiber-optic names such as Corning(GLW - Cramer's Take - Stockpickr) and JDS Uniphase(JDSU - Cramer's Take - Stockpickr), as well as to telecom equipment names such as Motorola(MOT - Cramer's Take - Stockpickr) and 3Com(COMS - Cramer's Take - Stockpickr). Corning was lately off 2.9%, JDS Uniphase was 1.2% lower, Motorola was losing 1.9%; 3Com was up, though, by 2.6%.

Telecom-equipment maker Lucent(LU - Cramer's Take - Stockpickr), however, was rising, up 7.6%, with traders suggesting that the stock put in a bottom yesterday.

Meanwhile, the Dow was doing a pretty good job of fighting off continued weakness in Eastman Kodak(EK - Cramer's Take - Stockpickr). Kodak was putting pressure on the index for a third straight day this morning after warning that its third-quarter earnings per share would fall 20 cents to 25 cents below its previous forecast. Kodak has fallen some 32% in the past three days, and was currently slicing 13 points from the Dow. Tech bigwig IBM(IBM - Cramer's Take - Stockpickr) was also pressuring the Dow, slashing some 10 points.

Hewlett-Packard(HWP - Cramer's Take - Stockpickr) and Procter & Gamble(PG - Cramer's Take - Stockpickr) were the Dow's rising stars. H-P has was adding some 15 points of upside to the blue-chip benchmark, as was Procter. Procter was getting a lift after it said this morning that it thinks double-digit EPS growth on the year is achievable.

Intel(INTC - Cramer's Take - Stockpickr) was finally getting a little lift after tearing into the red in the past week following an earnings warning. Intel was up 0.4%. And Exodus(EXDS - Cramer's Take - Stockpickr)was getting clobbered following news of its plans to acquire Global Crossing's GlobalCenter Web-hosting unit for about $6.5 billion in stock. A deal was initially aborted two months ago. Exodus, one of the Nasdaq's most actives, was down 10.5%.

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Sector Watch

Internet stocks were making a comeback this morning after J.P. Morgan made positive comments on the sector and said yesterday's sell-off was unwarranted. Internet stocks had a lousy session yesterday after priceline.com(PCLN - Cramer's Take - Stockpickr) warned of an earnings miss.

Morgan made positive comments on America Online(AOL - Cramer's Take - Stockpickr), eBay(EBAY - Cramer's Take - Stockpickr) and Yahoo!(YHOO - Cramer's Take - Stockpickr), which were rising 1.1%, 8.2% and 5.8%.

Internet incubators such as CMGI(CMGI - Cramer's Take - Stockpickr) and Internet Capital Group(ICGE - Cramer's Take - Stockpickr) were also bouncing back after hitting 52-week lows in trading yesterday. CMGI was up 8.7%, while Internet Capital rose 2.2%.

The energy stocks were giving up their traditional strength at the open. The American Stock Exchange Oil & Gas Index was off 0.8%. Other defensive stocks continued to show strength however, with the Amex Tobacco Index up 3.8%, the Dow Jones Utility Average 1.8% higher and the American Stock Exchange Pharmaceutical Index 1.5% higher.

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Bonds/Economy

The 10-year note lost some ground yesterday after the Labor Department revised the Consumer Price Index (definition | chart | source).

After discovering a software error, the Labor Department revised the consumer price for the first eight months of this year to a 2.7% rise instead of 2.6%. Separately, new orders for durable goods rose 2.9% in August.

Overall CPI inflation was running at a rate of 3.4% in August, while core CPI inflation -- which excludes food and energy -- was running at 2.5%, nearly a two-year high. TheStreet.com wrote about the revision yesterday.

A higher inflation rate devalues bonds because it erodes the value of the fixed interest payments they make.

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