Today's Market: Nasdaq Boosts 274 Points, Over 10%, in Record-Setting Day

12/05/00 - 05:06 PM EST

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How do you spell relief? A-L-A-N G-R-E-E-N-S-P-A-N.

The Big Guy's alangreenspan acknowledgement that the economy has slowed substantially and that the central bank must pay attention so that it doesn't slow too dramatically, sparked record-breaking rallies in both the Dow djia and the Nasdaq nasdaq .

The Nasdaq broke percentage and point gain records, while the Dow had its third-biggest point gain ever.

Major Indices
INDEX	CHANGE	%	VALUE	YR TO DATE
Dow	338.62	3.21%	10,898.72	-5.2%
S&P 500	51.57	3.89%	1376.54	-6.3%
Nasdaq	274.05	10.48%	2889.80	-29.0%
Russell 2000	20.78	4.61%	471.17	-6.7%
TSC Internet	41.72	11.23%	413.24	-64.2%
NOTE		CHANGE	PRICE	YIELD
10-Year Treasury		30/32	102 12/32	5.430%
Market data as of: 4:57 p.m. EST, Dec. 5, 2000

Greenspan validated what many were already assuming, which was that when the Federal Open Market Committee federalopenmarketcommittee meets Dec. 19, it will either cut rates, or it may leave short-term rates alone, but will change its stance toward economic conditions to one that is more balanced and not tempered with fears of inflation on the horizon. Either one is positive news for investors. Since June 1999, the Fed has raised interest rates six times to slow down the economy.

The comments by Greenspan were made in a speech given in New York to the trade group America's Community Bankers.

"Still, in an economy that already has lost some momentum," Greenspan said, "one must remain alert to the possibility that greater caution and weakening asset values in financial markets could signal or precipitate an excessive softening in household and business spending."

TheStreet.com took a look at Greenspan's speech in a separate story.

Meanwhile, the presidential election was looking more and more like a Bush victory after the U.S. Supreme Court threw a ruling over the recount back to the Florida Supreme Court and a lower court in the state refused to allow a recount. Vice President Al Gore's team has appealed the decision.

So, with election uncertainty still out there and poor fourth-quarter earnings looming ahead, is this incredible rally sustainable?

Tony Dwyer, chief market strategist at Kirlin Holdings, says it is. He offers as proof that the market was on session highs before Greenspan spoke.

Dwyer said, sure, the market was reacting to election news, but it was also digesting more earnings warnings, including last night's from chipmaker Xilinx XLNX, which warned about its future forecasts, and saw its estimates lowered by analysts this morning.

Other indications of sustainability: institutional buyers coming in off sidelines and rally in broad market, not focused to tech or Old Economy.

Speaking of which, the blue-chip index had plenty of support today. J.P. MorganJPM and other financials, including CitigroupC, shot up on the assumption of a drop in interest rates. J.P. Morgan contributed almost 80 points to the index, single-handedly.

Another big giver today was 3MMMM, which was lifted on news of James McNerney defection from General ElectricGE to join the Scotch-tape maker as chairman and CEO. It added about 70 points to the Dow's positive.

Elsewhere on the Big Board nysebigboard , NokiaNOK was the most actively traded name after the Finnish mobile phonemaker said it was extending its current growth forecast until 2003. It said it expects 2001 growth to come in at the high end of a range between 25% and 35%, while both 2002 and 2003 would grow by the same factor.

And the Nasdaq saw big-caps, including CiscoCSCO, DellDELL, IntelINTC and OracleORCL, back in the game.

Even online ad firm DoubleClickDCLK was up despite announcing it was cutting jobs because of slowing online ad sales. Executive vice president Jeffrey Epstein, at an investors' conference, said the reductions will bring the company back to its June 2000 employment level. The company had about 1,980 people at the end of June and had grown to about 2,100 by the end of September. The stock ended the day $1.00 higher, or 8.3%, to $13.

So, can we expect more of the same tomorrow? Dwyer said recovery from the past few months isn't going to happen in a day or two, but he believes we've seen the lows.

Market Internals

Breadth was tremendous on heavy volume.

New York Stock Exchange : 2,080 advancers, 840 decliners, 1.391 billion shares. 167 new 52-week highs, 89 new lows.

Nasdaq Stock Market : 2,782 advancers, 1,200 decliners, 2.426 billion shares. 65 new highs, 235 new lows.

Most Active Stocks

NYSE Most Actives

Nokia: 37.7 million shares.
Lucent LU: 28.5 million shares.
Nortel NT: 24.4 million shares.

Nasdaq Most Actives

Cisco: 89 million shares.
Intel: 73.4 million shares.
WorldCom WCOM: 60.3 million shares.

Sector Watch

Banks and brokers were benefiting from Greenspan's comments. The American Stock Exchange Broker/Dealer Index rose 9.2%, while the Philadelphia Stock Exchange/KBW Bank Index moved up 5.1%.

Money was flowing from the safety sectors like the Philadelphia Stock Exchange Forest & Paper Products Index, off 0.1%, and the Morgan Stanley Commodity Related Equity Index, down 1.5%, into such newfangled tech sectors as the Philadelphia Stock Exchange Computer Box Maker Index, up 8.2%, and the Philadelphia Stock Exchange Semiconductor Index, 10.2% higher.

Even those kooky Internet stocks soared today. TheStreet.com Internet Sector index, or DOT, rocketed up 11.2%. TheStreet.com E-Commerce Index increased 7.9% and the TheStreet.com E-Finance Index tacked on 8.9%.

Bonds/Economy

Treasuries were up strongly thanks to comments by Fed Chairman Alan Greenspan suggesting that the central bank is likely to lower interest rates in the months ahead. The bond market is also benefiting from weak economic news.

The benchmark 10-year Treasury note lately was up 30/32 at 102 12/32, lowering its yield to 5.43%.

In a speech this morning, Greenspan acknowledged that the economy is at risk of slowing too much, implying that the Fed will lower interest rates to keep that from happening.

The bond market is also benefiting from the news that factory orders (definition | chart | source ) fell more sharply than expected in October. Orders for manufactured goods, an indicator of the health of the factory sector, fell 3.3%. Economists polled by Reuters had forecast a 2.7% drop.

Also, the BTM Weekly U.S. Retail Chain Store Sales Index (definition | chart ), not normally a market-mover, fell 2.6% in the latest week, its biggest drop in over four years.

International

Overseas, European markets were positively giddy, following the run-up after American markets responded favorably to the high court rulings on the presidential election. And with a president-elect about to be named in the coming weeks, traders can rest easier. Toward the end of the trading day, London's FTSE rose 140.3 to 6299. Paris' CAC gained 203.4 to 5994.9, while Germany's Xetra Dax advanced 229 to 6637.1.

In the currency market, the rampaging euro attempted to make further moves against the dollar after strengthening from record lows. It last traded at $0.8797, slightly lower than yesterday. The yen was trading just a little higher against the dollar at 111.12.

And in Asia, the picture was a mixed one. Following yesterday's late-day weakness in the Nasdaq Composite Index , Japan's Nikkei 225 slipped 259.68 to 14,695.05. But Hong Kong's Hang Seng bucked that trend and tracked 13.97 higher to 14,573.21.