Long Side of Wall Street All Smiles With Rally Rolling On

The benign October jobs report continues to inspire gains across the board, with tech stocks leading.
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Investors and traders were saying a big thank you to the October

employment report

today as major market gauges were cruising into the afternoon enjoying a steamy rally.

Today's much-anticipated

nonfarm payrolls

data have sent waves of cheer through Wall Street as the economic report sent stocks and bonds rallying, padding their already recent juicy gains. Market players were heartened by the report, which eased dramatically inflation fears and worries that interest rates are heading higher.

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The

Labor Department

said nonfarm payrolls gained 310,000 in October, barely missing the

Reuters

average forecast of 313,000. The unemployment rate, which had been expected to remain at 4.2%, dropped to 4.1%, a level it hasn't seen since January 1970. But offsetting the drop in the unemployment rate was the fact that average hourly earnings, which had been forecast to rise 0.3%, rose just 0.1%, and eased wage-inflation fears. Despite the good news in today's report and in recent inflation data, there's still a chance the

Federal Open Market Committee

will raise the target on the fed funds rate on Nov. 16.

The

Dow Jones Industrial Average

was up 102, or 1%, to 10,742. Powering the Dow the most was

J.P. Morgan

(JPM) - Get Report

, followed closely by

American Express

(AXP) - Get Report

. On the downside, the biggest drag on the blue-chip gauge was

Disney

(DIS) - Get Report

, as traders dumped the stock in the wake of the company's earnings report released yesterday after the close.

The

S&P 500

was up 14, or 1%, to 1377. The

Nasdaq Composite Index

was up 39, or 1.3%, to 3095. The Nasdaq Comp is on pace to close up for the seventh session in a row, and to close at an all-time high for the sixth consecutive day.

Helping boost the S&P 500 and the Nasdaq Comp was supercharged, superperforming

Qualcomm

(QCOM) - Get Report

, which was flying again, up 29 5/8, or 11.2%, to 294. Providing the fuel for Qualcomm's advance today was word that

Deutsche Banc Alex. Brown

analyst Brian Modoff raised his target on the wireless phone equipment maker to 320 from 250. On Wednesday, he raised his target to 250 from 225.

Elsewhere among story stocks,

Cobalt Networks

(COBT)

was making a whopper of a debut, soaring 502.2%.

The small-cap

Russell 2000

was up 2, or 0.5%, to 442.

TheStreet.com Internet Sector

index was up 16, or 2%, to 813.

Inktomi

(INKT)

was surging and leading the gains in the DOT.

Financial sector gauges were on fire. Again. The

American Stock Exchange Broker/Dealer Index

was up 2.9%, the

Nasdaq Financial Index

was up 1.2% and the

S&P Insurance Index

was up 3.5%.

In the Treasury market, the 30-year bond was lately up 25/32 to 101 3/32, yielding 6.05%, but off its intraday peak. (For more on the fixed-income market, see today's early

Bond Focus.)

In tech, semiconductors and telecom-type stocks were sizzling. The

Philadelphia Stock Exchange Semiconductor Index

was up 2.6%, while the

Nasdaq Telecommunications Index

was up 2.5%.

Bruce Bittles, market strategist at

J.C. Bradford

in Nashville, Tenn., said the market's recent rally was a combination of several factors, including too many bears in the stock and bond markets, a rally in bonds and strong earnings news.

Bittles said he thinks the Fed will raise interest rates when it meets on Nov. 16. "That's still in the cards," he said.

If the Fed does hike by 25 basis points, what's the effect on the market? "I don't think any at all," Bittles said.

Bittles said the market's enjoying a very strong short-term rally that has the potential to carry into Thanksgiving. He said the market could consolidate its gains in December and then rally in January with the Dow making new highs then.

Volume was heavy overall and breadth was decidedly positive (see below).

Speaking of breadth, its poor condition has been a sore spot for many market analysts for some time.

Louise Yamada, director of technical research at

Salomon Smith Barney

, pointed out that there's more buying power in the rally that started last Thursday and it suggests at least some follow-through. Overall, she expressed concern about the narrowness of the market's advance although she did say the advance/decline line has improved.

She noted that only 56% of the weight of the S&P 500 is looking technically positive.

Meanwhile, among other indices, the

Dow Jones Utility Average

was up 0.1%; the

Dow Jones Transportation Average

was up 0.8%; and the

American Stock Exchange Composite Index

was down 0.2%.

Market Internals

New York Stock Exchange:

1,738 advancers, 1,170 decliners, 607 million shares. 81 new 52-week highs, 68 new lows.

Nasdaq Stock Market:

2,057 advancers, 1,667 decliners, 803 million shares. 174 new highs, 45 new lows.

Nasdaq Announces Net-Based European Exchange

The Nasdaq Stock Market announced a joint venture to establish a new Internet-based European equities exchange by the fourth quarter of next year, in a move the exchange's chairman called a step toward a global electronic stock market.

The venture, which is to be called

Nasdaq-Europe

, is backed by

News Corp.'s

(NWS) - Get Report

venture capital fund,

Softbank

of Japan and

Viventure Capital

of France. It would be Nasdaq's second overseas expansion; the

National Association of Securities Dealers

, which operates the Nasdaq exchange, recently announced a similar venture in Japan.

"Investors here will have easy access to companies here," NASD Chairman Frank Zarb said in announcing the European venture in a morning press conference in London, and linked to New York.

"Not all entrepreneurs are born in America," News Corp. Chairman Rupert Murdoch said from Australia in a satellite link to the press conference.

Zarb downplayed the impact the new European exchange might have on existing exchanges in London, Frankfurt and Paris. "We should not be ... considered a threat to venerable existing institutions," Zarb said. "We have a lot of respect for the existing institutions."

Zarb said one challenge the venture faces is different regulatory rules in England, France and Germany. "It's going to be more complicated than I'd like to see," he said.

Zarb said the kind of growth that's occurred with individual investors in U.S. stock markets may replicate itself in other countries.

"In the United States, Mr. and Mrs. Main Street have come to Wall Street," he said. "We anticipate that that general trend will occur elsewhere."

--

Robert Kowalski

Friday's Midday Watchlist

By Tara Murphy
Staff Reporter

Mergers, acquisitions and joint ventures

Warner-Lambert

(WLA)

rose 15/16 to 90 15/16 after saying it would not pursue

Pfizer's

(PFE) - Get Report

unsolicited $79.7 billion rival bid for the company. Pfizer launched the offer in response to a planned merger between

American Home Products

(AHP)

and Warner. Shares of American slipped 13/16 to 54 3/16 while Pfizer dropped 2 7/16, or 6.5%, to 34 13/16.

Although the Warner board said its proposed merger with AHP is in the best interest of shareholders, it did not say it was refusing Pfizer's bid. Warner also said it would defend its actions in legal proceedings brought on by Pfizer, calling the claims "totally without merit."

TheStreet.com

wrote about Pfizer's bid in a story

last night.

AlliedSignal

(ALD)

gained 5/8 to 55 5/8 after saying it has begun a $9.50 a share tender offer for

TriStar Aerospace

(TSX)

, which it said TriStar's board has approved. TriStar inched up 1/16 to 9 1/16.

Synthetic Industries

(SIND)

jumped 3 1/2, or 12.3%, to 32 1/16 after it said it would be sold to a unit of

Investcorp

and other investors, in a deal valued at $535 million. The transaction, which calls for Synthetic to be bought for $33 a share, is set to close in mid December.

Teligent

(TGNT)

, an integrated communications company, jumped 13 1/8, or 26.7%, to 62 3/4 after it said it has raised $500 million in new capital to expand its buildout of local broadband networks, with the investor group led by

Microsoft

(MSFT) - Get Report

and private equity firm

Hicks Muse Tate & Furst

Shares of Microsoft slipped 3/4 to 91.

TheStreet.com/nytimes.com

joint newsroom covered the Teligent news in a

story today.

In other Microsoft news, a crucial ruling, the "findings of fact," is expected today in the Microsoft antitrust trial.

Earnings/revenue reports and previews

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified

.)

Disney

(DIS) - Get Report

dropped 2 1/16, or 7.8%, to 24 7/16, after yesterday reporting fourth-quarter earnings, excluding charges, of 10 cents a share, in line with the 20-analyst estimate but down from the year-ago 14 cents. Excluding charges, fourth-quarter earnings fell 37% to $212 million from $296 million a year earlier amid a slump in its home-video and product-licensing businesses. Including the charge, net income fell to $85 million.

This includes a $132 million charge related to consolidation as well as costs associated with its acquisition of Internet search engine

Infoseek

(SEEK)

. Shares of Infoseek were lately slipping 5/8 to 33 15/16.

Great Lakes REIT

(GL) - Get Report

rose 3/16 to 15 5/16 after it posted third-quarter funds from operations of 50 cents a share, beating the three-analyst estimate of 47 cents and up from the year-ago 44 cents.

iVillage

(IVIL)

lost 1 1/4 to 25 1/4 after it posted a third-quarter loss of $1.12 a share, narrower than the three-analyst estimate of a $1.39 loss and the year-ago $1.92 loss.

Speedway Motorsports

(TRK) - Get Report

toppled 13 7/8, or 30.2%, to 32 1/16 after it warned it expects to post a loss for the third quarter. The 11-analyst estimate currently calls for the company to earn 3 cents a share. The company said it expects to generate a profit in the fourth quarter, however it said it is likely net earnings will be $3 million less than expected.

Offerings and stock actions

Xircom

(XIRC)

rose 1 5/8 to 55 1/8 after it announced its plans for a 3.5 million-share secondary offering.

Analyst actions

Warburg Dillon Read

cut its rating on

Aflac

(AFL) - Get Report

to hold from strong buy. Shares of Aflac were hopping 5/16 to 52 7/16.

Lehman Brothers

upped its price target on

Altera

(ALTR) - Get Report

to 70 from 60. Shares of Altera were climbing 2 1/2 to 57.

PaineWebber

upped its price target on

Digex

(DIGX)

to 42 from 35. Digex shares were mounting 2 1/2, or 7.3%, to 36 5/8.

Morgan Stanley Dean Witter

sliced its rating on

Eastern Enterprises

(EFU) - Get Report

to neutral from outperform. Eastern Enterprises was advancing 1/4 to 56 1/2.

Morgan Stanley rolled out coverage of

LTX

(LTXX)

with an outperform rating and set a price target of 25 on the stock. LTX was adding 1 1/16, or 6.1%, to 18 5/16.

Goldman Sachs

initiated coverage of

NTL

(NTLI)

including it on its recommended list. NTL was gaining 4 1/2, or 5.6%, to 84 1/2.

U.S. Bancorp Piper Jaffray

boosted its price target on

Radware

(RDWR) - Get Report

to 68 from 55. Despite the upgrade, Radware was losing 6 3/4, or 12%, to 49 9/16.

PaineWebber upgraded shares of

Staples

(SPLS)

to buy from attractive. Staples shares were falling 13/16 to 17 9/16.

PaineWebber rolled out coverage of

Tandy

(TAN) - Get Report

with a buy rating and a price target of 82. Shares of Tandy bounced 3 3/8, or 5.5%, to 64 3/8.

Robertson Stephens

upped its rating on

Varian Semiconductor

(VSEA)

to strong buy from buy. Shares of Varian were climbing 2 7/16, or 9.6%, to 26 3/8.

Miscellany

The Inside Wall Street column in

Business Week

, which is penned this week by Gary Weiss, offers up a positive story on

Sherwin-Williams

(SHW) - Get Report

, citing

U.S. Trust

portfolio manager David Tillson, who's been buying shares of Sherwin-Williams, in a bet that the company will soon climb out of its current troubles. Shares of Sherwin-Williams were advancing 5/16 to 22 11/16.

Mattel

(MAT) - Get Report

and

Philip Morris

(MO) - Get Report

garner positive mention in the column, citing value investor Andrew Bischel, president of

Spare Kaplan Bischel & Associates

, who has been buying up shares of both those beaten-up stocks. Shares of Mattel were slipping 1/16 to 13 5/8, while Phillip Morris was skidding 1/8 to 25 15/16.

Elsewhere,

JDS Uniphase

(JDSU)

was jumping 3 1/8 to 195 after reports that it is the subject of a positive item in the column with Robert Gillam, president and chief investment officer at

McKinley Capital Management

in Anchorage, Alaska, singing the stock's praises.

Yesterday, JDS Uniphase agreed to buy

Optical Coating Laboratory

(OCLI)

Shares of Optical Coating were hopping 2 3/4 to 170 9/16.

TheStreet.com/nytimes.com

joint newsroom wrote about the deal in a story

yesterday.