Today Wall Street has more to thank Europe for than German cars, French wine and those cute shoes it picked up in Milan. A cut by the
European Central Bank
in its key interest rate has taken stocks out of a situation technical analysts deem dangerous.
In the parlance of the chartists, yesterday's trading in technology stocks was what is called an outside day -- a day when the highs exceed the previous day's highs and the lows exceed the previous day's lows. Specifically, yesterday was an outside
day in techs, a day when stocks close at or below the previous day's low. It's thought to be a bad thing for stocks.
And it may go a way toward explaining why the market stumbled coming out of the blocks this morning, despite lots of indications that it was heading higher. An outside down day "tells you that investors have changed their minds midday," explained Bob Dickey, managing director of technical analysis at
Dain Rauscher Wessels
in Minneapolis. "In the case of yesterday, investors were hot on them in the morning and down on them in the afternoon. Usually when sentiment changes midstream like that, it will hang over the market for a period of time."
That notion that today's poor action in tech stocks, which has been weighing on the whole market, finds its roots in yesterday's turnaround isn't limited to chartists. Things were beginning to look a little overheated there, according to Kevin Klee, manager of
American Fund Advisors
. A lot of the turnaround had to do with
good earnings report last night. After putting in some good gains ahead of earnings, Yahoo! began to see some selling pressure Tuesday and Wednesday. "That's a normal kind of thing" for favored companies like Yahoo!, said Klee. "They accelerate before earnings are announced and then they sell off."
The only thing that was odd was that Yahoo!, and a whole bevy of Internet stocks that have been following it around like it was a mother duck, sold off before the earnings were announced. "The selling that we all knew was going to come today started a little early," said one tech trader.
When the European Central Bank cut its benchmark interest rate 50 basis points to 2.5%, however, that selling stopped. The move, announced around 12:15 p.m. EDT, lately had 30-year Treasury up 25/32 to 97 2/32, its yield easing to 5.45%. (For more on the fixed-income market, see today's early
In response, the
American Stock Exchange Broker/Dealer Index
was rallying 3.8% and the
Philadelphia Stock Exchange/KBW Bank Index
was up 1.6%. And financials were joining drugs and select tech stocks in leading the major indices strongly higher.
Dow Jones Industrial Average
was up 84 to 10,169, the
was up 14 to 1341, the
Nasdaq Composite Index
was up 25 to 2570 and the
was up less than 1 to 398. The Net sector surged as well, with
TheStreet.com Internet Sector
index up 8 to 708 and
TheStreet.com E-Commerce Index
up 5 to 128.
Market internals remained middling.
New York Stock Exchange
advancers were leading decliners 1,469 to 1,353 on 485 million shares, with 86 new 52-week lows leading 67 new highs. On the
Nasdaq Stock Market
, advancers and decliners were matched at 1,801 each on 666 million shares. New lows were leading new highs 89 to 69.
Thursday's Midday Movers
was flying up 35 7/16, or 154%, to 58 1/2 after
BancBoston Robertson Stephens
last night priced its 5.5 million-share IPO above range at $23 a share. The Virginia-based Internet retailer specializes in computer, office and technology products.
Retailers were by and large responding favorably to favorable March same-store sales figures. An early Easter was said to have boosted the month's sales.
- AnnTaylor (ANN) was rising 2 3/16 to 49 3/4 on sales up 21%.
Dillards (DDS) - Get Report was rising 1 3/16 to 26 3/16 on sales up 12%.
Dollar General (DG) - Get Report was rising 3/16 to 36 1/2 on sales up 7.8%.
Federated Department Stores (FD) was losing 1 1/4 to 40 1/4 on sales up 9%.
Gap (GPS) - Get Report was rising 3 1/16 to 71 7/16 on sales up 21%.
Goody's Family Clothing (GDYS) was sinking 3 7/32, or 27.1%, to 8 11/16 on sales up 2.7% and word that the company expects its first-quarter results to be "significantly lower" than in the year-ago period.
J.C. Penney (JCP) - Get Report was rising 3/16 to 40 1/4 despite sales down 0.7%.
Kmart (KM) was rising 1/4 to 16 1/2 on sales up 8.1%.
Limited (LTD) was rising 1 7/16 to 42 7/8 on sales up 18%. The company also sees first-quarter earnings coming in a penny ahead of the 19-analyst consensus for 9 cents a share.
ShopKo (SKO) was losing 5/16 to 29 7/8 despite sales up 17.8%.
Talbots (TLB) was down 3/8 to 25 7/16 despite sales up 9.6%.
Wal-Mart (WMT) - Get Report was up 2 1/16 to 99 9/16 on sales up 11.3%.
In other news:
was up 13 3/16, or 60.6%, to 34 63/64 on news Toronto's
is buying the company for $271 million.
was down 10 23/32, or 60.4%, to 7 1/16 after announcing it will no longer provide services to
as a result of a restructuring of their relationship. Under the new arrangement, ICG has retained its license of Architel's ASAP product but not the licenses of the Objectel and OMS products. ICG was up 1 5/8, or 7.7%, to 22 9/16.
was up 2 5/8, or 12.1%, to 24 3/8 after agreeing to a one-year advertising and promotion pact with
. AOL was off 1/2 to 157 3/8.
was up 1, or 21.1%, to 5 23/32 on news of an agreement with recently issued
for a direct link to its online footwear store in the clothing and accessories section of iVillage's shopping channel. Terms of the deal were undisclosed. iVillage was up 1/8 to 95 1/4.
Advanced Micro Devices
was down 13/16, or 5%, to 15 5/16 after last night warning first-quarter results will fall short of expectations because of competition and continuing production problems with its K6-2 chip. AMD sees quarterly revenue of $630 million. The 21-analyst forecast called for a quarter loss of 56 cents vs. the loss of 39 cents a year ago. Rival
was up 1/16 to 132 1/4.
was down 4 7/8, or 22.7%, to 16 5/8 after last night saying it sees second-quarter earnings of 28 cents a share, with revenue of $31.6 million, because of production shortages of certain products, timing of trade promotions and a transition to a new warehouse. The eight-analyst forecast called for 41 cents vs. the year-ago 39 cents. Today,
Hambrecht & Quist
dropped the stock to market perform from buy.
was down 1 9/16, or 11.1%, to 12 3/4 even after last night posting fourth-quarter earnings of 48 cents a share, 2 cents higher than the four-analyst estimate and above the year-ago 45 cents.
was up 2 13/16, or 20.8%, to 16 1/2 after last night saying that thanks to increased demand, it sees first-quarter earnings of 21 cents to 23 cents a share -- above the five-analyst prediction for 13 cents. The company, which made 11 cents in the year-ago period, also filed for a 3 million-share offering.
was down 1 3/16 to 113 5/16 even after posting first-quarter earnings of 65 cents a share, in line with the 13-analyst estimate and up from the year-ago 57 cents. GE said its quarter operating margin was 16.3% of sales, up from last year's 15.1%.
was down 5 3/16, or 32.1%, to 11 after warning its first-quarter earnings will fall below expectations and come in around 20 cents to 24 cents a share due to increased medical costs. The company also announced plans to record $90 million in additional medical claims. The 15-analyst estimate called for earnings of 34 cents. Merrill Lynch downgraded the stock to long-term accumulate from buy while keeping it at intermediate-term neutral.
was up 1 13/16, or 22.3%, to 10 after last night posting first-quarter earnings of 12 cents a share, beating both the eight-analyst estimate of a 4-cent profit and the year-ago loss of 15 cents.
Lernout & Hauspie
was down 3 3/4, or 8.6%, to 39 3/4 even after last night reporting fourth-quarter earnings of 23 cents a share, in line with the five-analyst estimate and 3 cents above the year-ago figure.
was up 1, or 44.4%, to 3 1/4 after last night saying it expects first-quarter earnings of 19 cents a share due to "significant management and business focus changes." The single-analyst view called for a loss of 3 cents vs. the year-ago profit of 3 cents.