Leap-Day Market Leaning Higher - TheStreet

Leap-Day Market Leaning Higher

But traders will have to break their recent habits if yesterday's blue-chip rally is going to extend itself.
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It looks like the market is going to start Leap Day 2000 with a rather nice hop.

At 9:05 a.m. EST, the

S&P 500

futures were up 7.7, more than 4 points above fair value and indicating some good strength in the early going.

For relatively arcane reasons related to the earth's rotation and the Gregorian calendar, this year's type of leap year only occurs once every 400 years, and, consequently, experts have been fearing that computers may mistake Feb. 29 for March 1. Sure, that sort of snafu isn't capable of offering the promises of cataclysm we got from Y2K. But still, it's enough to have already caused some minor problems in Singapore, New Zealand and Japan.

A lot of old-economy stocks probably wish a leap-year computer glitch were their biggest problem. Yesterday's rally by the

Dow Jones Industrial Average

may have been a welcome relief, but the profit-taking watch is already on. Traders have used nearly every rally in financial, retail and manufacturing stocks as an opportunity to sell. It's certainly possible that

NYSE

nontech issues can continue to go higher, for no other reason than that they're just so darned low. But, lately, when Wall Street loves those stocks, it loves them as a trade, not as a trend.

"I think we'll probably have a better trend in the tech sector after yesterday's correction," said Rob Cohen, co-head of listed trading at

Credit Suisse First Boston

. "I wouldn't be surprised to see a rally there, and a reversal in some of the Dow stocks. I don't think the market can sustain a rally in the Dow vs. a selloff in tech. It's probably a short-lived event."

The consensus remains the broader big-cap market won't pick up until we see a turnaround in at least one of the factors that have been capping the blue-chips for about 10 months. The market will have to see some light at the end of the

Fed

-tightening tunnel, for example, or an alteration of the very hostile fund-flow dynamic caused by the relative attractiveness of high-growth and high-yielding tech stocks.

Tech doesn't look any less attractive this morning. The

Nasdaq 100

futures were up 50.95 to 4208.95, indicating strength across the board for the large-cap Comp names, especially

3Com

(COMS)

, which continues to rage ahead of this week's IPO of its

Palm

unit. 3Com surged in

after-hours trading last night after Palm upped the price range of its offering to $30 to $32 a share, up from $14 to $16. The stock last traded at 83 7/8 on

Instinet

, up from a close of 79 1/16.

The laws of divergence would suggest that tech strength necessitates broader weakness. But a soft print in today's

Chicago Purchasing Managers' Index

, due out at 10 a.m., could do much to help extend yesterday's Dow rally, especially after last week's huge upward revision of

gross domestic product

.

The bond market was little changed, with the 10-year Treasury down 2/32 to 100 17/32 and yielding 6.426%. The 30-year bond, meanwhile, was up 8/32 to 101 2/32, putting its yield at 6.171%.

The large European indices were looking strong in early afternoon trading, led by the Paris

CAC

, which was up 133.18, or 2.2%, to 6235.91. Frankfurt's

Xetra Dax

was up 85.44, or 1.1%, to 7672.57, while London's

FTSE

was up 105.8, or 1.7%, to 6205.4.

The euro is still trying to crawl back from yesterday's beating, lately sitting at $0.9707.

Asian markets generally moved higher on the heels of the Dow's strength.

In Hong Kong, the

Hang Seng

rose 185, or 1.1%, to 17,169.44 ahead of the release of the details of

Pacific Century CyberWorks'

bid for

Cable & Wireless HKT

(HKT)

. PCCW, an Internet firm less than 1 year old, agreed to pay about $38 billion for C&W HKT, thereby outbidding

Singapore Telecommunications

.

In Tokyo, the

Nikkei

advanced 239.42, or 1.2%, to 19,959.52. The dollar traded around 110.20 yen in lethargic currency dealings overnight, and lately stood at 109.72 yen.

South Korea's

Kospi

rose 9.37, or 1.1%, to 828.38. Thailand's

SET

index sank almost 2.4% amid worries that nonperforming loans in that country's financial industry could be higher than previously expected.

For a look at stocks in the preopen news, see Stocks to Watch, published separately.