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Wednesday's Market: Roller Coaster of Day Leaves Dow With Gains

Diane Hess

After a roller coaster ride on the stock market this afternoon, the major indices finished mixed. In late day trading, the Dow Jones Industrial Average flipped above and below 9500, but closed up 30 to 9515. The Nasdaq Composite Index was stuck below the 1650 watermark, ending down 34 to 1639.

Despite today's gains on the Dow, most Wall Street pros agree that until the earnings picture brightens, the stock market outlook will darken. Furthermore, experts were skeptical of today's advance on the blue-chip index, as buying is typically met with selling in a bear market environment.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 29.71 0.31% 9,515.42 -11.8% S&P 500 3.21 -0.29% 1103.25 -16.4% Nasdaq 34.20 -2.04% 1638.80 -33.7% Russell 2000 1.22 -0.29% 425.74 -12.0% TSC Internet 2.14 -1.18% 178.60 -40.6% NOTE CHANGE PRICE YIELD 10-Year Treasury -- 100 18/32 4.929% Market data as of: 5:00 PM ET, Apr 4 2001

On the heels of yesterday's major selloff, traders said that investors lacked conviction about today's market. "People are figuring out how to rotate in and out of stocks," said Jim Volk, co-director of institutional trading at D.A. Davidson earlier in the day. "The markets aren't in disarray today, but they're going down."

Trading volume was light this afternoon, as apparently many investors decided to sit this session out. According to Volk, much of today's movement was the result of program trading, or computer-driven buying and selling of groups of stocks by institutions.

"It's nothing but a trading turn," said Todd Clark, head of listed trading at W.R. Hambrecht earlier this afternoon. "The market is very quiet, which doesn't bode well for this bounce." Clark further attributed today's gains to short covering, meaning the accelerated buying of stocks that had been shorted by investors.

Looking at the sectors swinging today, the Philadelphia Stock Exchange Semiconductor Index closed down 5.5%, after trading up at one point this afternoon. Earlier today, the Semiconductor Industry Association reported that chip sales in February declined 6.9% from January. Over the past few weeks, the chip sector has been hit hard amidst an uncertain earnings outlook. Shares of Intel (INTC Quote), a bellwether for the industry, closed off 9.5% to $22.63.

More bad news about earnings hit the market after the closing bell yesterday. The latest round of pre-announcements was centered on the software sector, where some Wall Street experts see room for stock prices to fall further. But on the heels of yesterday's carnage that hit both software and non-software names, the culprits were trading off of their Tuesday lows.

Among the companies to warn on Tuesday night, electronic commerce software manufacturer Commerce One (CMRC Quote), soared 7% to $6, Rational Software (RATL Quote) gained 3.6% to $14.44 and Sybase (SYBS Quote) traded higher by 5.8% to $13.69.

In a speech before the Senate Finance Committee this morning, Federal Reserve chairman Alan Greenspan said that the slowing U.S. economy poses a risk to free trade.

Elsewhere in the tech sector, shares of Lucent(LU Quote) bounced back from steep losses this morning, after the telecommunications company said that bankruptcy rumors were "absolutely false." Down 23.2% at one point this morning, the one-time highflier closed behind 13.6% to $6.78.