Friday's Market: I Want a Pony, and a New Tonka Truck, and a New Mitt, and a Higher Dow and Nasdaq

Christmas came a little early for the stock market today as the major indices all ended in the green.

Author:: Eric Gillin
Publish date:: Dec 22, 2000 4:19 PM EST

On the last session before Christmas the markets gave to thee -- a nice session spent in the green.

Flurries might have dropped on Wall Street, but stock prices weren't as investors discovered that shares can be bought instead of merely sold. Markets were overwhelmingly positive on rather brisk volume for the day before a holiday weekend. The number of companies with gains dominated those with losses, a major reversal from recent sessions, where a large number of new record lows have been set as losers easily outnumber the winners.

The

Dow Jones Industrial Average gained 148 to 10,635 thanks in no small part to the resurgence of

IBM

(IBM) - Get Report

The rank

Nasdaq Composite Index was a sweet-smelling, delicate little petunia, making teensy weensy moves upward as all these cautious traders have edged, every so slowly, back into tech.

Aw, who are we kidding! This is the Comp. There's no such thing as restraint! Investors dove back into battered technology with reckless abandon, driving almost every corner of the tech world skyward.

Yee-haw! Here's a quick tech-rally roundup, ya hear?

Chipmakers in the

Philadelphia Stock Exchange Semiconductor Index

were up 9.7% after falling in seven of the last eight sessions. Computer manufacturers were also chipper, with the

Philadelphia Stock Exchange Computer Box Maker Sector

up 9.8% on IBM's big gain. Biotechs and disk-drive peripherals were also much higher, as was wireless, but the big gold star goes to a sector that has seen more bloodshed than

Rambo: First Blood, Part II.

Still,

JDS Uniphase

(JDSU)

lost 4.9% on talk it might have some bad news in store from an analyst. Other networkers followed JDSU lower and then began to climb back from lows for the day.

TheStreet.com Internet Sector Index

rose 12.5% to 319.1, as the index struggled to come off a two-year low. Yesterday, the index dipped to 277.4, which it hadn't seen since the very first week of December 1998.

Back Up!

There's nothing quite like hype, huh? It can draw copious amounts of attention. Just look at

Tiny Tim's entire "career." The man got married on

Carson, for God's sake, despite having no discernable talent of any kind.

Today's Tiny Tim was Big Blue. In a none-too-subtle note titled "IBM: It's Back Up the Truck Time on IBM Shares,"

Salomon Smith Barney

analyst John B. Jones, Jr. implored investors to run, don't walk, to the nearest broker and buy, buy, buy. His reasoning was pretty clear, that IBM, for a company that has not preannounced or warned about its earnings, has been unjustly punished along with the rest of the PC sector.

"Rumors of a preannouncement are, in our opinion, completely unfounded. IBM continues to have a solid quarter," Jones wrote. "Preannouncements by other companies have been predominantly U.S. consumer driven with some disappointments regarding commercial PCs and PC servers -- IBM has very little consumer business left."

Jones reiterated his buy rating on the stock and held fast to his 52-week price target of $130. IBM ended up 9.1% to $89.

Now, Solly's rush to defend Big Blue couldn't come at a better time for the company. It wasn't more than two days ago that

Merrill Lynch

took the exact opposite position on IBM, cutting the company to neutral from accumulate, citing slowing corporate spending on IT. Merrill analyst Thomas Kraemer wrote: "We fear that the revisions from October to November may not be the last. Absent this downturn, we would not be downgrading."

At the crux of this issue appears to be the affect of corporate spending on IBM. Is corporate spending slowing so much that IBM will see its earnings picture darken? Or will IBM's reliance on this corporate spending help it weather the storm as consumers keep their wallets holstered?

Looks like we'll see on Jan. 15 after the bell, when Big Blue pulls back the curtain and shows Wall Street its earnings.

Elsewhere on the Dow,

Hewlett-Packard

(HWP)

J.P. Morgan

(JPM) - Get Report

and

Microsoft

(MSFT) - Get Report

all moved higher.

The Dow losers today were yesterday's winners.

Boeing

(BA) - Get Report

was off a bunch, not that it matters too much, the airplane maker will end 2000 as one of the market's best performers.

Coca-Cola

(KO) - Get Report

dropped a healthy amount, cutting into yesterday's solid gain.

Market Internals

Winners beat losers! Volume was strong! It's all so exciting!

New York Stock Exchange: 2,032 advancers, 893 decliners, 1.091 billion shares. 192 new 52-week highs, 85 new lows.

Nasdaq Stock Market: 2,664 advancers, 1,297 decliners, 2.193 billion shares. 91 new highs, 345 new lows.

Most Active Stocks

NYSE Most Actives

Lucent

(LU)

AT&T

(T) - Get Report

Compaq

(CPQ)

Nasdaq Most Actives

Cisco

(CSCO) - Get Report

WorldCom

(WCOM)

Sector Watch

Chemical stocks were higher, with the

S&P Chemical Index

gaining 3.8%. This was the second-straight day of rallies for the chemical stocks, which are trading at six-month highs.

Airlines shrugged off last night's announcement from

UAL

(UAL) - Get Report

, parent company of United Airlines, that December flights and sales would be impacted by the cold, rotten weather. The

American Stock Exchange Airline Index

rose 1.5%. Transports traded in lockstep. The

Dow Jones Transportation Average

rose 2.2%.

The institutions have returned to the winner's circle. The

American Stock Exchange Institutional Index

rose 1.8%.

Bonds/Economy

Treasury note and bonds ended higher in thin trading as the market closed early.

Although equities are staging a mild rally, the overall economic picture, a bleak one, is little changed. The demand for durable goods is up slightly, while consumer enthusiasm for holiday sales remains low.

The benchmark 10-year

Treasury note was up 6/32 to 105 18/32, dropping its yield to 5.014%.

In economic news, the

durable goods orders

(

definition |

chart |

source

) rose 2.3% in November, more than the 1.6% gain projected by economists polled by Reuters. Excluding orders for expensive transportation equipment, which rose 9.1%, new orders were up 0.4% for the month. The year-on-year growth of durables was 1.0%, a little higher than what was recorded last month but still the second lowest level since Nov. 1998.

The

personal income and consumption

(

definition |

chart |

source

) for November showed that salaries increased after having gone down in October. Personal Income grew 0.4% while spending increased 0.3%. Consumer spending has been low for the year and except for a couple of spikes in summer and fall, is back to an unusually low level for year-end.

The

Consumer Sentiment Index

(

definition |

chart ) for December dropped to 98.4 from a November reading of 107.6.

International

European and Asian markets had a mixed reaction to the Nasdaq's temporary recovery Thursday.

London's

FTSE

ended down 0.29%. Across the channel, Paris'

CAC-40

was up up 0.43%, while Germany's

Xetra Dax

gained 0.82%.

The flip-flopping euro was rising again, trading up to $0.9228. It has been gaining slowly in the past few weeks as the U.S. dollar weakens in the face of a slowing domestic economy.

Japan's markets had a mixed reaction to the Nasdaq's bounce Thursday. Japan's

Nikkei 225

rose a meager 3.87, or 0.03%, to 13,427.08 as worries grow that the country's economy may be headed for a recession. Two days ago, the Nikkei closed below the key 14,000 mark for the first time in almost 22 months.

Hong Kong stocks rose more robustly, however. The

Hang Seng

closed up 78.89, or 0.54%, to 14,738.21.

The greenback was higher against the yen to 112.71 yen.