Dow Rebounds With Triple-Digit Gain

Updated from 4:01 p.m. EST

Stocks resumed their winning ways Wednesday as the Dow posted a triple-digit gain on growing sentiment that a recovery is in the works. Meanwhile, tech stocks overcame worries about the data storage sector to secure solid gains in the final minutes.

The Dow Jones Industrial Average closed up 141 points, or 1.4%, to close at 10,574. The Nasdaq gained 24 points, or 1.3%, to 1890, and the S&P 500 rose 17 points, or 1.5%, to 1163.

EMC was lower after J.P. Morgan lowered its 2002 earnings outlook for the storage firm, joining Goldman Sachs, which cut its expectation earlier this week. Morgan cited pricing and demand issues and a profit warning Tuesday from McData (MCDT - Cramer's Take - Stockpickr), an EMC spinoff. EMC's shares fell 25 cents, or 2.2%, to $11.30. McData closed down nearly 27% at $11.65.

The Federal Reserve released its anecdotal report on economic conditions known as the "beige book," and said that wage and pricing pressures are subdued, while the economy is showing signs of recovery. The information is gathered from economists, market professionals and other business contacts from the Fed's 12 district banks. The Fed's policymaking arm, the Federal Open Market Committee , can consider the information for their next meeting, scheduled for March 19.

Proxy adviser Institutional Shareholder Services issued a report after the market's close Tuesday that lent crucial support to the proposed merger of Hewlett-Packard (HWP - Cramer's Take - Stockpickr) and Compaq (CPQ - Cramer's Take - Stockpickr). ISS told H-P shareholders they should vote in favor of the transaction. The opinion could sway shareholders who had been undecided and overcome the Hewlett and Packard families' intentions of using their 18% vote to block the merger.

In a move that could have broad implications, Merrill Lynch told clients it has become less enthusiastic about domestic equity investments and recommended they consider Japan and emerging markets instead. Merrill analysts also said they expect Intel (INTC - Cramer's Take - Stockpickr) to raise its first-quarter outlook to the higher end of the range when the chip heavyweight releases its mid-quarter update Thursday. Shares of Intel shed 26 cents to $32.96.

In the telecommunications sector, Sprint (FON - Cramer's Take - Stockpickr) reaffirmed its first-quarter and 2002 subscriber growth and cash-flow guidance. Meanwhile, wireless provider Sprint PCS (PCS - Cramer's Take - Stockpickr) predicted subscriber growth of 700,000 to 750,000 in the first quarter and earnings before interest, taxes, depreciation and amortization of about $600 million. Both issues fared well, with Sprint finishing up 8.7% and Sprint PCS up more than 20%.

ImClone Systems (IMCL - Cramer's Take - Stockpickr) and Bristol Myers Squibb (BMY - Cramer's Take - Stockpickr) said after the close Tuesday that they revised the terms of their agreement to develop Erbitux, an experimental cancer drug. The revision includes a lower cash payment up front from Bristol and a ceiling on ImClone's share of potential profits. The companies also agreed to expand Bristol's clinical and strategic role in the drug's development. ImClone's shares jumped 19.7% to $28.63.

Online book and music seller Amazon.com (AMZN - Cramer's Take - Stockpickr) said that its goal of reaching positive operating cash flow in 2002 remains in place despite the resignation of Chief Financial Officer Warren Jenson. Although Jenson's departure won't take place for several months, investors sent Amazon's shares down reeling early in the day, but the stock rallied and closed up 2.5% at $16.33.

Apparel retailer American Eagle Outfitters (AEOS - Cramer's Take - Stockpickr) beat earnings expectations for the fourth quarter by 2 cents, posting a net profit of 60 cents a share. Sales for the quarter rose 9.6% to $464.3 million. The stock was traded higher by 8.3% at $26.40

In the airline industry, United Airlines mechanics voted to accept a new five-year contract from UAL (UAL - Cramer's Take - Stockpickr), staving off the threat of a strike and giving them their first pay increase since 1994. Shares climbed 2.1% to $15.86. Other airlines followed suit, with Delta(DAL - Cramer's Take - Stockpickr) adding 3.5%, and AMR(AMR - Cramer's Take - Stockpickr) advancing 3.4%.

Energy shares turned in a strong performance for the second consecutive day with Calpine(CPN - Cramer's Take - Stockpickr) leading the way, climbing 18.8% to $10.87.

Bank One (ONE - Cramer's Take - Stockpickr) is the latest company to be singled out for its accounting methods, as the Federal Reserve is investigating its credit card securitizations, according to published reports in The Wall Street Journal. The move is apparently part a larger investigation of off balance sheet practices employed by banks.

Meanwhile, on the economic front, the Census Bureau said factory orders rose 1.6% in January, slightly ahead of the 1.5% consensus, and offered another sign that the economy is beginning to recover. U.S. government notes and bonds were lower. At 4 p.m. EST, the 10-year Treasury note was down 11/32 to 98 22/32, yielding 5.04%.

Overseas, stocks were higher with London's FTSE 100 rising 0.6% at 5246 and Germany's Xetra DAX up 1.1% at 5285. Japan's Nikkei 225 rose 0.1% to 11,359, and Hong Kong's Hang Seng added 0.2% to close at 11,003. In addition, the European Union announced that it plans to fight the U.S. on its decision to impose tariffs of up to 30% on some steel imports.