Strange Days, Indeed: Early Rally Ends Fair to Middling

(Updated from 4:12 p.m.)

The most recent fad to hit the market is the popular "one day on, one day off" diet. If nothing else, at least it's been consistent this week -- in its daily volatility.

Today became an "OK" day, as an early rally sputtered in late-day trading. The Dow Jones Industrial Average , which had been up by as much as 100 points, crashed below the flatline for a bit before settling to close up by 40.17 points, or 0.4%, to 10,610. The Nasdaq Composite Index ended the day off its session highs but still up, by 30.42 points, or 1.5%, to 2046.59. The broader-market S&P 500 gained 7.31 points, or 0.6%, to 1215.02.

Major Indices INDEX CHANGE % VALUE Dow 40.17 0.38% 10,610.00 S&P 500 7.31 0.61% 1215.02 Nasdaq 30.42 1.51% 2046.59 Russell 2000 3.92 0.81% 487.54 TSC Internet 2.69 1.30% 209.98 NOTE CHANGE PRICE YIELD 10-Year Treasury 5/32 99 5/32 5.112% Market data as of: 4:30 PM ET, Thu Jul 19 2001

The reasonably positive tone of the latest earnings releases had equities up across the board earlier, but investors must have thought over those murky outlooks as the day wore on.

Companies reporting earnings since Wednesday's close have, for the most part, sounded more constructive than previously. But in some cases, such as with Dell (DELL Quote - Cramer on DELL - Stock Picks), they're sounding just "less terrible" rather than providing proof that a profit improvement is on the way. Along with Dell's guidance, IBM (IBM Quote - Cramer on IBM - Stock Picks), which met earnings estimates, said it expects business to remain tough in the coming quarters.

Reports like this will continue to confound and confuse, as well as nix the possibility of an extended summer rally, analysts say. Expectations for various blue-chip companies are mixed. The economic situation is middling at best, and companies are confirming that a turnaround won't be engendered merely through good hope and belief in America, or something of that sort.

"There's no consistency -- a lack of stable leadership -- and there's this kind of volatility," said Brian Belski, fundamental market strategist at U.S. Bancorp Piper Jaffray. "If you look at technical indicators, they're not depicting volatility. But there's indecision on a daily basis, and I would call that volatility."

IBM, which endured better than many last quarter, said it fell short of analysts' expectations with regard to revenue, but met the bottom line expectations for the second quarter with earnings of $1.15 a share. The stock lost 0.3% to $104 today.

Among the overnight reports that came out about as expected (which, of course, means good in stock-market parlance, simply because it was expected) included Applied Micro Circuits (AMCC Quote - Cramer on AMCC - Stock Picks) and Broadcom (BRCM Quote - Cramer on BRCM - Stock Picks). "They're not exactly pounding the table positive," said Belski. "This is all the diagnosis of the bottom solidification process."

That may sound like chemistry to a market that's been waiting for confirmation of the bottom as soon as stocks dipped over the edge last year, but in some cases, it's more like alchemy -- the expected conversion of nothing special into something luminous.

Speaking of such, today's notable leaders are the aforementioned "put on a happy face" tech stocks. Broadcom, which lost money, but less money than expected, gained 8.9% to $42.45. Applied Micro Circuits lost 0.9% to $16.85, after writing off lots of inventory and providing little information in terms of the company's outlook.

Nokia (NOK Quote - Cramer on NOK - Stock Picks), which has been shredded along with the other cellular phone makers, added on 14.8% to $19.51 after merely beating earnings estimates by a penny and falling short of expected revenue. Nokia's shares are looking smart largely because company officials expect a pickup in the handset business in 2002, and that was a heartening sentiment today.

The most active name on the Big Board was Accenture (ACN Quote - Cramer on ACN - Stock Picks), the consulting group. Shares of the company, first sold at $14.50 yesterday, gained 4.6% to $15.17 in their first day of trading, on 35 million shares.

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