No Matter How You Slice It, Stock Market's Looking Better

Some might characterize the last couple of days market action as "not too good."

They'd tell you that the selloff that ripped the guts out of the market last week, though impressive, was not enough to undo the market's speculative excesses. This bounce up is just a bull trap and once the market starts going back down, we will see the market crash to new lows.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 184.91 1.75% 10,767.42 -6.3% S&P 500 40.17 2.87% 1441.61 -1.9% Nasdaq 254.41 7.19% 3793.57 -6.8% Russell 2000 26.83 5.84% 486.09 -3.7% TSC Internet 109.09 15.00% 836.25 -27.6% NOTE CHANGE PRICE YIELD 10-Year Treasury 1/32 103 10/32 6.048%

But Wall Street was having none of this blather after today's broad-based rally. After seeing stocks run up across the board, even pessimists would have to say that the market's outlook has improved.

"Each one of these days when prices are well-behaved creates a feeling that you're repairing the damage that was done last week," said Jon Olesky, head of block trading, Morgan Stanley Dean Witter. "The market is kind of getting its footing again."

Technology shares shone, with the rally in the Nasdaq Composite broadening out as the day wore on. Unlike yesterday, when the action was centered in the biggest Nasdaq names, today breadth was very good, with smaller names posting some big gains. The Nasdaq gained 254.41, or 7.2%, to 3793.57, bringing it back to where it closed last Wednesday.

The Dow Jones Industrial Average finished the day up 184.91, or 1.75%, to 10,767.42. Financials were the highlight there -- together American Express (AXP), Citigroup (C) and J.P. Morgan (JPM) contributed 70 points to the Dow's rise. Intel (INTC), too, was a strong contributor. The chipmaker gained 5.3% ahead of its first-quarter earnings, announced after the close.

The S&P 500 rose 40.17, or 2.87%, to 1441.61.

Though it was a good day all around, last week's pain remains keenly recalled. Everybody's pretty gun-shy.

"Investors are doing this one day at a time," said Manahan. "Last week was a horrific week. I haven't had too many conversations with people who say they are very bullish."

Blame it not just on the downturn, but on the way the market has chopped up and down over the last month.

"As much as I like all the green on my screen, I'm not comfortable with the level of volatility," said Salomon Smith Barney equity strategist Jeff Warantz. "Huge swings to the downside like this are always disconcerting. The moment you have another bad economic number, a company that surprises to the downside on earnings, and we could swing lower again. Anyone who says it's all over is not being realistic."

Yet despite that expectation of more volatility, Warantz remains constructive on the stock market. He and Solly strategist John Manley rose the equity portion of their model portfolio to 60% from 55% last Monday, and though that call was obviously "early" they are sticking to it.

"In the short-term, I can't tell you it's going to be completely smooth sailing," he said. "If you ask me what's going to happen in six months, I'll tell you I think the market's going to be up."

And many technicians, while they expect another turn down, are hopeful that the market can hang in there.

"I think we're looking for a retest of the lows, probably after the weekend," said Greg Nie, chief technical analyst at First Union Securities. "I think it has a chance to hold."

Among the major technology indices, the Philadelphia Stock Exchange Semiconductor Index rose 42.8, or 4.2%, to 1052.5. The Philadelphia Stock Exchange Computer Box Maker Index 23.45, or 5.7%, to 432.31. And the Morgan Stanley High-Tech 35 Index gained 50.8, or 5.6%, to 95.3.

Internet stocks were stronger. TheStreet.com Internet Sector index gained 109.1, or 15%, to 836.25, led by the likes of Yahoo! (YHOO), up 10.8%, and Inktomi (INKT), which rose 26.6%. TheStreet.com E-Finance Index gained 14.9%.

The Russell 2000 rose 26.83, or 5.84% to 486.09.

The American Stock Exchange Broker/Dealer Index gained 42.16, or 10%, to 465.91, led by American Express and Merrill Lynch (MER), which gained 10.3%.

Biotechnology stocks were stronger. The Nasdaq Biotechnology Index rose 10.57, or 10.6%, to 938.7, while the American Stock Exchange Biotechnology Index gained 41.4, or 10.2%, to 446.8.

The Dow Jones Transportation Average gained 90.95, or 3.4% to 2769.53, powered by airline stocks -- particularly Delta (DAL), which tacked on 2.4% on good earnings.

The 10-year Treasury bond finished the day down 1/32 to 103 10/32, dropping the yield to 6.048%.

Market Internals

New York Stock Exchange: 1,975 advancers, 1,009 decliners, 1.1 billion shares. 19 new 52-week highs, 69 new lows.

Nasdaq Stock Market: 3,271 advancers, 1,058 decliners, 2.15 billion shares. 15 new highs, 202 new lows.

>To order reprints of this article, click here: Reprints