Friday's Market: I Want a Pony, and a New Tonka Truck, and a New Mitt, and a Higher Dow and Nasdaq
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 International Business Machines Corporation 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
TheStreet Recommends
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 JPMorgan Chase & Co. Report
and
Microsoft
(MSFT) - Get Microsoft Corporation Report
all moved higher.
The Dow losers today were yesterday's winners.
Boeing
(BA) - Get Boeing Company 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 Coca-Cola Company 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.
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Most Active Stocks
NYSE Most Actives
- Lucent (LU) : 37.2 million shares.
AT&T (T) - Get AT&T Inc. Report: 26.1 million shares.
Compaq (CPQ) : 24.4 million shares.
Nasdaq Most Actives
- JDS Uniphase: 61.7 million shares.
Cisco (CSCO) - Get Cisco Systems, Inc. Report: 60.6 million shares.
WorldCom (WCOM) : 57.7 million shares.
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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 United Airlines Holdings, Inc. 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%.
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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 |
) 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 |
) 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.
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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.
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