Be Vewwy Quiet, We're Hunting Bargains: Techs Turn Around

Yesterday's Nasdaq carnage has yielded to dip-buying, and the Dow continues to surge.
Author:
Publish date:

While Internet stocks try to heal the severe wounds of recent days, tech stocks regain some of the ground surrendered

yesterday and blue-chips advance again, three words remain somewhat annoyingly implanted in the market's brain:

Consumer Price Index

.

Tomorrow, the financial markets will find out of April's sharp rise in the CPI was an aberration or a sign of things to come.

"It's kind of quieting out," said Jay Suskind, head of institutional equity trading at

Ryan Beck

. "The market's seeing a decent move to the upside on light volume."

"Everyone's got their eyes on tomorrow's CPI number," he said, adding that he hopes the report will crystallize what the Fed will do with interest rates.

Economists are expecting a 0.2% rise in both the overall and core CPI, according to a

Reuters

survey.

Also on the horizon,

Federal Reserve

Chairman

Alan Greenspan

is slated to testify Thursday before the

Joint Economic Committee

on monetary policy and the economy.

Internet stocks were trying to piece themselves together after yesterday's dreadful session.

TheStreet.com Internet Sector

index, which tumbled 8.8% yesterday, was up 10, or 1.9%, to 512 -- still a mile off its all-time closing high of 790.44, set April 12.

"Doubt if the correction will end until these stocks reach absurdly low levels," wrote Stephen Shobin, chief technical analyst at

Lehman Brothers

about the Internet sector in a research note this morning. "Most will have to fall under their 200-day moving averages, then build bases for many months. Put/call ratios reflect too much bargain-hunting. Complacency is not a sign of a bottom. Allowing for little bounces, we think the correction has a lot more to go."

In blue-chip land, the

Dow Jones Industrial Average

was up 104, or 1%, to 10,667, padding yesterday's gains.

Merck

(MRK) - Get Report

and

Exxon

(XON) - Get Report

have been the biggest boosts to the Dow so far.

Cyclicals -- market stars yesterday and prime drivers of the Dow's advance -- were mostly higher again today. The

Morgan Stanley Cyclical Index

was up 0.5%.

Treasuries were firm for the second day in a row and were helping to underpin stocks. The 30-year bond lately was up 15/32 to 88 27/32, yielding 6.06%. (For more on the fixed-income market, see today's early

Bond Focus.)

The

Nasdaq Composite Index

was up 33, or 1.4%, to 2432, rebounding after yesterday's Internet-led downturn. Among tech-sector gauges, the

Morgan Stanley High-Tech 35

was up 2.1% and the

Nasdaq 100

was up 2%.

Semiconductor stocks -- which have had a joyous month -- were making solid advances again today after

Merrill Lynch

analyst Joe Osha raised his price targets on seven semiconductor companies. The

Philadelphia Stock Exchange Semiconductor Index

was up 3%.

The

S&P 500

was up 15, or 1.2%, to 1309. The

Russell 2000

was up 3, or 0.8%, to 435.

Online brokers, which have suffered steady losses of late, were mixed to higher today.

E*Trade

(EGRP)

was up 6.9% and

Ameritrade

(AMTD) - Get Report

was up 5.7%, but

Charles Schwab

(SCH)

was down 1.5%.

"More or less, I think the market's capped on the upside," said Steven Goldman, market strategist at

Weeden

in Greenwich, Conn.

Sector-wise, Goldman gave positive mention to paper stocks in part because of firming paper prices. Paper stocks have advanced again today. The

Philadelphia Stock Exchange Forest & Paper Products Index

was up 0.8%.

On the

New York Stock Exchange

, advancers were leading decliners 1,676 to 1,121 on 387 million shares. On the Nasdaq, winners were edging losers 1,788 to 1,721 on 474 million shares.

On the NYSE, 106 issues had set new 52-week lows while 64 had touched new highs. On the Nasdaq, 59 issues had set new lows while new highs totaled 39.

On the Big Board,

America Online

(AOL)

was most active, with 19.5 million shares changing hands. It was up 6 1/8, or 6.8%, to 96 5/8.

On the Nasdaq,

Qwest Communications

(QWST)

was most active, with 18.3 million shares changing hands. It was up 1 7/16 to 35 1/2. Qwest fell sharply yesterday in the wake of its announcement Sunday that it made a $55 billion cash and stock bid for

U S West

(USW)

and

Frontier

(FRO) - Get Report

.

Meanwhile, among other indices, the

Dow Jones Utility Average

was up 0.6%. The

American Stock Exchange Composite Index

was up 0.5%. The

Dow Jones Transportation Average

was up 0.5%.

Tuesday's Midday Movers

By Heather Moore
Staff Reporter

Not participating in today's broad rebound was Dow component

Coca-Cola

(KO) - Get Report

. Possibly having downward influence on the stock was word that the company was withdrawing all drinks produced in Belgium from the Dutch market following a health scare. Scores of Belgian children reportedly have suffered from vomiting, nausea and dizziness after drinking Coke products. KO recently was off 1 5/16 to 63 1/2, continents away from its all-time intraday high of 88 15/16.

In other news:

Arm Financial

(ARM)

was down 1 1/8, or 13%, to 7 1/2 after

PaineWebber

lowered it to neutral from buy.

CD Radio

(CDRD)

was up 2 1/2, or 10%, to 27 5/8 after agreeing to work with

Ford

(F) - Get Report

to give motorists access to CD Radio's digital satellite radio. Ford was up 3/16 to 53 3/4.

CMP Group

(CTP)

was up 6 1/8, or 30.5%, to 26 3/16 after

Energy East

(NEG)

agreed to acquire the company for $29.50 a share in cash, or $957 million. Energy East also will assume about $271 million of CMP preferred stock and long-term debt. Energy East was up 1/8 to 26 3/8.

First Tennessee National

(FTEN)

was up 1 5/8 to 39 3/8 after

J.P. Morgan

started coverage with a buy.

HealthSouth

(HRC) - Get Report

was up 1 1/8, or 7.9%, to 15 5/16 on last night's news that the company plans to split its operations into two separate publicly traded companies -- one for inpatients and patients needing hospitalization (to be called

HealthSouth Hospital

), and the other for the company's larger outpatient group.

Yankee Energy

(YES)

was up 6 7/8, or 21.2%, to 39 3/8 after

Northeast Utilities

(NU)

agreed to buy the company in a deal valued at $679 million. Yankee shareholders will receive $45 a share, 45% payable in Northeast shares and 55% in cash. Northeast Utilities was down 1/8 to 17 3/16.

Earnings/revenue movers

Best Buy

(BBY) - Get Report

was up 1 3/4 to 54 1/2 after posting first-quarter earnings of 22 cents a share, beating the 16-analyst

First Call

estimate of 20 cents and moving up from the year-ago 8 cents.

Integrated Systems

(INTS)

was down 2 7/16, or 18.6%, to 10 3/4 after late yesterday recording first-quarter earnings of 1 cent a share, below the year-ago 7 cents.

Rexall Sundown

(RXSD)

was down 1 15/16, or 14.4%, to 11 9/16 after last night reporting third-quarter earnings of 28 cents a share, missing the six-analyst view by 3 cents but topping the year-ago figure by 2 cents.

Salomon Smith Barney

downgraded the stock to outperform from buy.

Rite Aid

(RAD) - Get Report

was up 1 1/8 to 24 15/16 after last night reporting first-quarter earnings of 31 cents a share, including relocation charges. The 14-analyst estimate called for operating earnings of 32 cents vs. the year-earlier 30 cents.

Solectron

(SLR)

was up 2 1/2 to 60 5/8 after posting third-quarter earnings of 29 cents a share, in line with the 21-analyst forecast and above the year-ago 20 cents.