SAN FRANCISCO -- Displaying more Teflon than
, the stock market shook off not only
(LU) profit warning Thursday night but a stronger-than-expected employment report as well. The expansive gains left most market players aghast.
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"I went home last night thinking today would be one of the worst down days we've had in years," said Timothy Heekin, director of equity trading at
Thomas Weisel Partners
in San Francisco, an outlook shared by many. "A lot of people got the fake out."
Dow Jones Industrial Average continued its impressive comeback from
selloff, rising 269.30, or 2.4%, to 11,522.56, an all-time high.
The Dow got its biggest boost from
Procter & Gamble
Nasdaq Composite Index, which had fallen nearly 10% in the prior three days, gained 155.49, or 4.2%, to 3882.62, its best-ever point increase. The
S&P 500 rose 38.02, or 2.7%, to 1441.47.
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Overcoming early declines, the price of the 30-year Treasury bond rose 8/32 to 94 15/32, its yield falling to 6.54%. The gains came although nonfarm payrolls rose by 315,000 in December while average hourly earnings rose 0.4%, both in excess of expectations. The unemployment rate was unchanged at 4.1%, as expected.
The employment report did not dispel the notion the
will raise interest rates next month. However, it did not fuel concerns the rate hike will be 50 basis points.
Dow Jones Utility Average
continued its recent surge, rising 5.14, or 1.8%, to 297.78. The performance of the "utes" suggest the Fed will raise rates 25 basis points in February and 25 basis points at its March meeting "but that's it" for the next six months, according to one market watcher. "The market is starting to realize this."
In addition to the bond market's ability to successfully "digest" the employment number, the key today was a sense "this Lucent situation is Lucent specific," Heekin said who also noted . portfolio managers were "licking their chops" at the prospect of a big decline this morning. "They didn't get it and had to come in and buy 'em at these higher levels."
Overnight gains by
-- which continued in U.S. trading -- were prime indicators that Lucent's problems would be self-contained, the trader said.
Other telecom names such as
, up 26.4%, actually
from Lucent's woes rather than being dragged down by them. Elsewhere,
rose 5.8% and
Even Lucent stabilized after
harsh after-hours decline, rising 3.6% with over 136 million shares traded, the busiest session for a single stock in
New York Stock Exchange
Further reflecting that the far-reaching implications of Lucent's
were unique to Lucent, optical telecom equipment makers enjoyed stellar gains, including
, up 20.1%.
JDS Uniphase helped
TheStreet.com New Tech 30
rise 49.79, or 9.1%, to 595.13. Unveiled Wednesday, the TSC New Tech 30 is an expanded index designed to replace the
index: The market-cap-weighted index remains focused on tracking the most scorching part of the market, the magnet for Wall Street's hot money. A list of the new index components is available
TheStreet.com Internet Sector
index rose 58.49, or 5.7%, to 1084.89 behind strength in Net favorites such as
rose 12.97, or 2.7%, to 488.31 as market internals were solidly positive.
In NYSE trading, 1.225 billion shares were exchanged while advancers dominated declining stocks 2,259 to 854. In
Nasdaq Stock Market
action, 1.628 billion shares traded while gainers led 2,595 to 1,577. New 52-week high bested new lows 68 to 41 on the Big Board and by 148 to 72 in over-the-counter trading.
The bulk of tech bellwethers rose on the session, leading the
up 5.7% and the
Morgan Stanley High-Tech 35
higher by 3.7%.
was a notable exception, falling 3.8% amid chatter it may produce lower-than-expected earnings.
As tech stocks recovered, some of the recent enthusiasm for value names waned.
, for example, declined 3.3% after
cut its short-term rating to neutral from accumulate; the stock hit an all-time high yesterday.
However, it was not an "either or" proposition today, further encouraging traders. The
S&P Barra Growth Index
rose 3.5% while the
S&P Barra Value Index
Previously out-of-favor names such as
and drug makers -- led by
-- improved noticeably. The
American Stock Exchange Pharmaceutical Index
Bucking convention, Thomas McManus, equity portfolio strategist at
Banc of America Securities
, said the broad-based strength was not surprising.
The employment data was "not as strong a people were fearing" and after bond yields reversed their early rise, you could "chalk one up to the good guys," the bullish strategist said.
As for the impressive breadth, McManus noted the "average stock is very attractively valued" after struggling in 1999 and 1998" while many made "little progress" since the summer of 1997.
However, the strategist warned against overanalyzing the recent upswing by value stocks.
"Nobody makes a big bet on underperforming groups in October," he said, suggesting there was "pent-up demand" for value stocks and "you've got to wait and see whether the fundamental backdrop will validate those trades."
Given his expectations for the economy to slow and bond yields to decline in 2000, McManus said he is "wary" about the prospects for basic material stocks. However, he foresees continued gains for consumer staples, financials, drug stocks and utilities among formerly out-of-favor groups.
Among other indices,
Dow Jones Transportation Average
gained 27.64, or 0.9%, to 2964.72 and the
American Stock Exchange Composite Index
climbed 6.00, or 0.7%, to 863.76.
For the week, the Dow rose 0.2%, the S&P shed 1.9%, the Nasdaq declined 4.6%, the Russell shed 3.3%, the DOT fell 6%, the TSC New Tech 30 fell 3.7%, the Dow transports slid 0.4%, the Dow utilities jumped 5.1% and the Amex Composite fell 1.5%.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
shot up 315.8, or 3.9%, to 8429 and the
Mexican Stock Exchange IPC Index
jumped 294.44, or 4.4%, to 7047.09.