What worries about a Brazilian devaluation wrought, the actuality cast asunder (at least for one day).
rallied a stunning 33.4% in the wake of the country's decision to no longer defend its currency, the real, and global markets followed suit. Major Wall Street proxies posted solid gains, with technology, financial and airline stocks leading the charge. High-flying Internet stocks posted a mixed performance, but the IPO of
met with stunning success, rising 471%.
Dow Jones Industrial Average
closed up 219.62, or 2.4%, to 9340.55, hitting its high of 9342.61 late in the session. The point gain is the eighth-biggest in history, although the percentage rise is not historically significant.
led the Dow's charge, reflecting the sectors pacing the overall market's rise. The
Philadelphia Stock Exchange/KBW Bank Index
rose 3.4%, the
American Stock Exchange Broker/Dealer Index
jumped 4.3% and the
Morgan Stanley High-Tech 35
rose 31.07, or 2.6%, to 1243.26 while the
gained 6.95, or 1.7%, to 427.05.
Nasdaq Composite Index
jumped 71.38, or 3.1%, to 2348.20, notching its fourth-biggest point rise ever.
Traditional tech stalwarts rose in near-unanimity, sending the
up nearly 4%.
each sported gains of more than 5% gains .
TheStreet.com Internet Sector
index rose 11.69, or 2.4%, to 504.37, relatively subdued compared to exaggerated gains in its short history.
was the big drag on the index, falling 7.8%. In addition to Marketwatch.com, big Net gainers included
, up 15.6%, and
, higher by 17.9%; none are index components.
'Our thinking is the currency is still overvalued and it's too fluid a situation,' Merrill's Douglas Wilde said of Brazil. 'You can get burned pretty easily.'
trading, 799.9 million shares were exchanged while advancers swamped declining issues 2,181 to 857. In
Nasdaq Stock Market
action, 1.009 billion shares traded while gainers led 2,618 to 1,493. New 52-week highs bested new lows 39 to 15 on the Big Board and by 98 to 41 in over-the-counter trading.
While inclement weather in New York and anticipation of the long holiday weekend kept NYSE volume relatively modest, the Nasdaq extended to eight its record string of sessions with more than a billion shares traded. (Financial markets are closed Monday in observance of Martin Luther King Jr. Day.)
Today's options expiration may have contributed to the afternoon rally, traders said. The volatility and events in Brazil may have prevented some trades from being placed in the days leading up to expiration.
"Certainly some of it had to do with expiration, but by the same token you have to remember index funds came in in the last hour and they have been doing that for several weeks now," said Ned Collins, executive vice president of U.S. stocks at
Daiwa Securities America
, noting some program buying by his own foreign clients at the close. "Also, there was a fairly good tone in the market all day long. It was a mirror image of what happened yesterday."
Collins said he was surprised at the extent of the rally, believing the Dow would be stuck in a trading range between 8900 and 9400 "to consolidate, and confirm the gains we've made are sustainable. But "the feeling with Brazil is the worst may be over and it was a very pleasant, happy way to close the week," he said.
After Withering in the Heat, Brazil Flourishes in the Spotlight
The developments in Brazil were, of course, the topic du jour in financial markets.
The local market's embrace of such seemingly draconian developments is "classic," said Michael Scarlatos, an independent international economist. "When a country devalues, its prospects via the export market improve. Also, the view is that the stranglehold of interest rates in order to protect the currency may no longer be there."
The "key question" for Brazil now is its ability to "contain the inflationary impact" of the devaluation by preventing price hikes corresponding to the level of devaluation, Scarlatos said. Ironically, "an approaching recession could help" because consumers will balk at higher prices. If that proves to be the case "it's a successful devaluation," he said.
The "real risk" in
Group of Seven
capitals is "contagion," the economist continued. "If this does indeed spillover, it will be Washington's worst nightmare come to fruition." That Argentina's dollar peg held today is "heartening" but "it's still not absolutely a safe bet" that either Argentina or Mexico (or both) will engage in competitive devaluations. Mexico's peso fell 3.5% vs. the dollar.
Scarlatos expects "browbeating language on Brazil to hurry up its fiscal plans and perhaps extra support for Argentina and Mexico" when Brazilian officials meet with U.S. and
officials this weekend. A wildcard is the possibility of currency controls in Brazil, similar to Argentina. "If they talk about it, the real will appreciate," he said. The real gained 8.4% today after some harrowing losses earlier this week.
, the bellwether of Brazilian ADRs, climbed 27.9%.
Douglas Wilde, international investment strategist at
, could not share even the cautious optimism Scarlatos expressed.
"I'm somewhat skeptical of the nature of this rally," Wilde said of the Bovespa's jump. "I think the devaluation for some investors was a big overhang; now that it's a reality, some investors believe there's value there. Our thinking is the currency is still overvalued and it's too fluid a situation. You can get burned pretty easily."
Wilde agreed there is "no immediate pressure on other nations" to devalue, "but you can't rule it out."
As for the weekend powwow of finance officials, the strategist forecasts there will "probably" be more concessions made to Brazil, perhaps with more funds pledged. "The problem is, that is only prolonging the problem," he said. "They've got this ongoing dependency and the problem isn't getting solved. Brazil has come an awful long way over the last four or five years in harnessing its hyper-inflation and rectifying its fiscal accounts, but the tenuous global environment poses a significant challenge."
Among other indices, the
Dow Jones Transportation Average
rose 68.25, or 2.2%, to 3148.53; the
Dow Jones Utility Average
gained 3.11, or 1%, to 306.54; and the
American Stock Exchange Composite Index
climbed 11.13, or 1.6%, to 709.29.
For the week, the Dow industrials fell 302.77, or 3.1%; the S&P 500 shed 31.85, or 2.5%; the Nasdaq Comp rose 3.38, or 0.1%; the Russell 2000 slid 4.18, or 0.9%; TheStreet.com Internet index gained 4.60, or 0.9%; the Dow transports lost 211.75, 6.3%; the Dow utilities slid 3.60, or 1.1%; and the Amex Composite rose 1.53, or 2.2%.
The 30-year Treasury bond shed 26/32 to 102 4/32 in a shortened pre-holiday session, its yield rising to 5.11%.
Elsewhere in North American equities today, the
Toronto Stock Exchange 300
jumped 165.19, or 2.5%, to 6759.42 and the
Mexican Stock Exchange IPC Index
skyrocketed 261.18, or 7.8%, to 3617.77. For the week, the TSE 300 lost 109.51, or 1.6%, and the IPC slipped 20.78, or 0.6%.
Friday's Company Report
Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.
Shares of the year's biggest IPO so far, MarketWatch.com, didn't start swapping hands until lunchtime. But MKTW only needed a half-day to soar 470.5% on nearly a million shares. The stock gained 80 to 97 1/2. The company's widely anticipated 2.75 million-share IPO was priced top-range at $17 a share by
BT Alex. Brown
last night. The lead underwriter increased the offering's range to $16-$17 yesterday after it had previously upped the range to $14-$16 from the original $10-$12 range. MarketWatch.com, publisher of the business news Web site
, is a joint venture between
. Data Broadcasting dropped 9 7/16, or 30.3%, to 21 3/4; CBS picked up 13/16 to 34 15/16.
took a trip down IPO valuation lane in a
piece on MarketWatch.com this afternoon.
Elsewhere in Netland, video software maker
jumped 4 1/2, or 9%, to 55 after unveiling plans with
to develop the first end-to-end, broadband streaming media platform. @Home slipped 1/16 to 102.
Mergers, acquisitions and joint ventures
lifted 15/16 to an all-time high of 82 3/4 after acquiring
for an undisclosed amount.
upgraded the stock to recommended from market performer.
Golden Books Family Entertainment
gave back 1/4, or 12.7%, to 1 23/32 after rallying yesterday on rumors
may acquire it. The Mouse lost 1/16 to 36.
surged 3 3/16, or 8.8%, to 39 1/4 after yesterday buying privately held
for $695 million in cash and stock.
Pharmacia & Upjohn
brought in 13/16 to 56 after the Swedish government sold its $1.9 billion stake in the company.
shot up 2 9/16, or 9.8%, to 28 5/8 on market chatter the publisher was in talks to form an alliance with
. Time Warner added 2 1/4 to 61 13/16.
(SCV.A:NYSE) vaulted 3 7/8, or 17.2%, to 26 3/8 after
acquired a nearly 13% stake in the company. Volvo, which slid 5/8 to 27 3/4, said it spoke with Scania's main shareholder,
, about a potential combination.
Online technology and content provider
shed 5/8 to 15 1/4 after
units jointly purchased 1.2 million shares, almost 10%, in the company in a private placement for $7.70 a share. GE took in 3 11/16 to 100 3/4.
expanded 1 11/16, or 17.3%, to 11 7/16 after agreeing to buy privately held
International Data Response
for an undisclosed amount.
Xoom.com powered up 8 9/16, or 17.9%, to an all-time high of 57 after
agreed to provide online white and yellow pages and classifieds for the company. Infospace.com added 2 1/2 to 55 1/2.
Earnings/revenue reports and previews
Asymetrix Learning Systems
skidded 1, or 17%, to 4 7/8 after saying last night it sees a fourth-quarter loss of 15 cents to 17 cents a share because it was unable to recognize orders booked late in the period. The three-analyst estimate called for a loss of 7 cents vs. the year-ago loss of 35 cents.
advanced 5 7/8, or 6.5%, to an all-time high of 96 after late yesterday reporting fourth-quarter earnings of 54 cents a share, meeting the 22-analyst prediction and topping the year-earlier 42 cents. The company said it expects its first quarter to be as strong as this quarter.
dropped 1 9/16 to 64 after last night posting third-quarter earnings of 64 cents a share, in line with the five-analyst estimate and above the year-ago 57 cents. The company said it sees fourth-quarter revenue growth coming in on target with expectations.
grew 15/16 to 26 1/8 after reporting fourth-quarter earnings of 21 cents a share, beating the 12-analyst of 15 cents but down nearly 48% from the year-ago 40 cents. The company attributed declining prices for many of its coated and supercalendered printing papers.
climbed 1 3/8, or 5.6%, to 26 after saying last night it plans to take a fourth-quarter charge of $42.5 million after integrating its New Image intraoral camera line into its major dental equipment franchise.
flew 2 1/4, or 6.7%, to 36 1/16 after posting second-quarter earnings of 37 cents a share, 2 cents higher than the five-analyst forecast and above the year-ago 32 cents. BT Alex. Brown upgraded the stock to strong buy from buy.
sank 2 1/2, or 13.5%, to 16 1/4 after saying late yesterday it sees second-quarter earnings of 10 cents to 12 cents a share compared with the year-ago 66 cents. The six-analyst view called for 41 cents. The company blamed soft order activity and continuing cost overuns at some divisions.
Fifth Third Bancorp
lifted 5 1/2, or 8.5%, to 70 1/8 after reporting fourth-quarter earnings of 55 cents a share, 1 cent higher than the 15-analyst estimate and above the year-ago 45 cents.
fell 5/8 to 57 5/8 after reporting fourth-quarter earnings of 54 cents a share, in line with the 13-analyst forecast and up from the year-ago 52 cents.
Friendly Ice Cream
plunged 1 9/32, or 20.1%, to 5 3/16 after saying last night it expects to report a fourth-quarter loss of 55 cents to 60 cents a share due to labor costs. The three-analyst estimate called for a loss of 13 vs. the year-ago loss of 52 cents.
picked up 7/8 to 61 7/16 after reporting first-quarter earnings of 86 cents a share, beating the five-analyst view of 83 cents and up from the year-ago 70 cents.
advanced 5 1/4, or 8.1%, to 70 3/8 after reporting fourth-quarter earnings of 84 cents a share, a penny above the 21-analyst view and higher than the year-ago 75 cents. The company said it plans to sell its mortgage business, credit card portfolio and Network Services transaction processing unit.
after last night reporting third-quarter earnings of 34 cents a share, missing the 11-analyst estimate by a penny but beating the year-ago 30 cents. Today, BT Alex. Brown downgraded the stock to market perform from buy and
NationsBanc Montgomery Securities
cut it to hold from buy.
lost 4 9/16, or 11.5%, to 35 1/8 after late yesterday saying it expects to report third-quarter earnings of 20 cents to 25 cents a share, below the eight-analyst forecast for 36 cents. The company, which earned 34 cents in the year-ago period, cited reduced demand for its flight services. Today,
sliced the stock to hold from buy.
rose 15/16 to 51 11/16 after recording a fourth-quarter loss of 17 cents a share, nowhere near the 11-analyst call for a profit of 21 cents and below the year-ago profit of 83 cents.
tumbled 5 3/8, or 28.7%, to 13 3/8 after late yesterday saying it expects fourth-quarter earnings to fall short of the nine-analyst prediction for 53 cents a share because of shortfalls in its global consulting operations. In the year-ago period, the company earned 37 cents.
lowered 8 1/4, or 8.4%, to 89 1/2 after late yesterday posting first-quarter earnings of 8 cents a share, in line with the five-analyst estimate and above the year-ago 6 cents. But the computer memory chip design company warned that the next two quarters may be flat with the first quarter due to a seasonal decline in royalties from shipments of integrated circuits for use in
video games. Rambus also cited the discontinuation of development on Rambus-based controllers for PC multimedia applications by
. Analysts called for 9 cents in the second quarter, vs. the year-ago 7 cents, and 10 cents in the third quarter, vs. the year-ago 7 cents.
gained 2 5/8, or 13%, to 22 7/8 after late yesterday posting third-quarter earnings of 42 cents a share, beating the six-analyst forecast for 41 cents and the year-ago 37 cents.
Texas Regional Bancshares
spiked up 1 7/16, or 6.2%, to 25 after saying its fourth-quarter earnings may come in 2 cents above the three-analyst consensus of 48 cents a share. In the year-ago period, the company made 42 cents.
Offerings and stock actions
jumped 1 1/4, or 5.5%, to 24 1/8 after last night approving a $10 million stock repurchase program.
added 2 to 140 3/8,
lost 1 7/8 to 223 3/8,
shot up 8 9/16, or 17.3%, to 58 7/16, and
added 15/16 to 28 1/4 after
Warburg Dillon Read
started coverage with hold ratings.
grew 2 3/8, or 6.3%, to 40 1/16 after
raised it to strong buy from accumulate.
took in 1 3/8 to 56 after Merrill Lynch raised it to near-term buy from accumulate while keeping its long-term buy. The firm also pushed up
to near-term buy from neutral, maintaining its long-term buy. Alaska took in 2 5/16 to 49 5/16. Elsewhere in the sector,
regional airline unit last night entered a codesharing agreement with
. Mesaba flew 1 1/4, or 6.8%, to 19 3/4; Continental flew 1 5/16 to 35.
skidded 3 15/32, or 25.9%, to an annual low of 9 29/32 after BT Alex. Brown slashed the stock to buy from strong buy.
brought in 15/16, or 11.7%, to 9 1/32 after
oft-wrong Inside Wall Street column made bullish comments about the company's fundamentals, Internet sales and potential to be taken over. The column also made positive remarks about
, which grew 3 1/2, or 13.5%, to an all-time high of 29 1/2.