Today's Market: Stocks Stage Late-Game Rally After Rough First Few Innings

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New York Mets fans take note. You can come back late in the game and leave the building with a win. Maybe not when Roger Clemens is throwing blistering fastballs and broken bats. But still. You can.

With 90 minutes left in the day, the Nasdaq Composite Index looked at an 0-2 count, sitting some 140 points from where it opened the day. Things looked bleak, with technology getting railroaded and those battered fiber-optic stocks taking the red expressway and taking the huge percentage loss offramp.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 53.64 0.52% 10,380.12 -9.7% S&P 500 0.46 -0.03% 1364.44 -7.1% Nasdaq 42.61 1.32% 3272.18 -19.6% Russell 2000 4.55 0.96% 479.76 -5.0% TSC Internet 12.55 2.29% 560.37 -51.5% NOTE CHANGE PRICE YIELD 10-Year Treasury -- 100 14/32 5.733% Market data as of: 4:51 p.m. EDT, Oct. 26, 2000

And then it happened -- a 184-point reversal. Opticals came off their session lows and began gathering some momentum, while chipmakers rebounded a bit. Microsoft (MSFT Quote) emerged as a late-session leader, taking early morning losses and ending with a big, big gain of 5.2%. Nearly every tech sector, from PCs to dot-coms, turned around bad days and ended with gains.

The Comp ended up 43 to 3272, a huge comeback from its session low of 3081. Huge, 2-billion-plus volume helped add more oomph to today's wild action. The Chicago Board Options Exchange Volatility Index, which is a ratio of calls (bets the market will rise) to puts (bets it won't) hit a peak of 34 right at 2:30 p.m. EDT, when the rally started. The fever broke and then volatility cooled as the Nasdaq rose.

Over on the Dow Jones Industrial Average things were a bit more disappointing. After having triple-digit gains in the late afternoon, it merely ended up 54 to 10,380.

American Express (AXP Quote), Citigroup (C Quote) and Wal-Mart (WMT Quote) were the big losers, while technology pulled to the upside. IBM (IBM Quote), Intel (INTC Quote) and Microsoft (MSFT Quote) added a combined 69 to the Dow's gain.

JDS Uniphase (JDSU Quote), which posted better-than-expected earnings after the bell, was a big reason for the Nasdaq turnaround. JDS, which traded at 62, with a loss of 9 points during the day, swung around and finished up $3.44, or 4.8%, to $74.44.

Other opticals also reversed their fortunes. Nortel (NT Quote), which touched off all the selling with its earnings release two das ago, rose $50 cents to $45.38 after hitting a session low of $42.56. SDL (SDLI Quote), which was off almost 44 points at one point, pulled out a gain of $6.38 to $240.56. But Ciena (CIEN Quote) didn't join in on the fun. It fell 5% to $103.

JDS Uniphase's earnings release this evening could really determine where this market heads, Todd Clark, head of listed trading at W.R. Hambrecht said. "It's going to be a very pivotal number." And that picture, the one that JDS Uniphase paints, might be bleak. So what happens in a worst-case scenario? Does the Comp fall below 3000? 2900?

"I have no reason to believe that it won't fall to 2800," Clark said.

That hypothetical drop to 2800 would put the Comp back to where it was in November 1999. Today's turnaround aside, it's off more than 20% this year, which technically makes this a Nasdaq bear market. It's down nearly 40% from its March peak.

Market Internals

Whew! Looks like we've got a photo finish! After looking crappy for most of the day, winners rallied against the losers and made things really close to call at the bell, while volume boomed. The New York Stock Exchange had more winners, the Nasdaq had slightly more losers.

New York Stock Exchange : 1,451 advancers, 1,397 decliners, 1.29 billion shares. 37 new 52-week highs, 100 new lows.

Nasdaq Stock Market : 1,919 advancers, 1,983 decliners, 2.147 billion shares. 33 new highs, 213 new lows.

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Most Active Stocks

NYSE Most Actives

• Nortel: 61.7 million shares.

• AT&T (T Quote): 43.1 million shares.

• Corning (GLW Quote): 36.7 million shares.

Nasdaq Most Actives

• JDS Uniphase: 91.8 million shares.

• Cisco (CSCO Quote): 81.2 million shares.

• WorldCom (WCOM Quote): 65.8 million shares.

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Sector Watch

Chipmakers and tech stocks rallied at the end of the day to move into positive territory. The Philadelphia Stock Exchange Semiconductor Index, which hit a low of 653.9 during the day, ended up 6.2%. It should probably say thank you to Intel (INTC Quote), which gained 8.2%.

The Morgan Stanley High-Tech 35 was another notable winner. It gained 2.1%. The only notable loser out there were computer peripherals in the American Stock Exchange Disk Drive Index.

Losers were out there, even if they weren't in tech. Financials were among the worst as brokers and bankers were a mild bust, while insurers took the big bang. The S&P Insurance Index fell 4.1%, while the American Stock Exchange Broker/Dealer Index and the Philadelphia Stock Exchange/KBW Bank Index both fell more than 1%.

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Bonds/Economy

Bonds are mixed this afternoon, following a down day yesterday.

The benchmark 10-year Treasury note was lately flat at 100 14/32, yielding 5.692%.

The 30-year Treasury bond was at 107 10/32, 1/32 lower, to yield 5.733%.

The economic data that came in earlier today was relatively benign.

The Employment Cost Index (definition | chart | source ) for the third quarter rose 0.9%, after a 1% gain in the prior quarter. A 1% increase had been expected.

Initial jobless claims (definition | chart | source ) for the week of Oct. 21 were lower at 305,000, from 310,000 in the previous week.

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International

European markets were mixed at the end of trading.

The FTSE 100 in London fell 65.50 to points to 6302.

The CAC 40 in Paris was 69.48 lower to 6208.48, while the Xetra Dax in Frankfurt was up 78.19 to 6826.41.

The euro tumbled below what currency traders were calling a key support level, lately trading down to 0.8314.

The major Asian equity markets closed lower Thursday, as the Nasdaq's 5.6% slide Wednesday put pressure on the region's technology issues.

Tokyo was the one exception to the downtrend, as the Nikkei 225 closed up a paltry 18 points, or 0.1%, at 14,858.4.

In Tokyo trading, the dollar traded up 0.33 yen to 108.24 yen Wednesday. The greenback was lately inching lower, at 108.15.

The Nasdaq's drop weighed more heavily on indices throughout the rest of the region Thursday, as South Korea's Kospi index slid 18.7, or 3.4%, to close at 523.7; Taiwan's TWSE index fell 81.9, or 1.4%, to finish at 5941.9; and Hong Kong's Hang Seng index dipped 64.9, or 0.4%, to end the day at 14,996.2.

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