Market Celebrates More Signs of Slowdown With Big Rally - TheStreet

Wall Street needed a miracle, and it got one. After failing to score a rally yesterday, the market received another strand of weaker-than-expected data that sparked an early-morning rebound. On word of a cooling economy, grateful investors entered the stadium and are ready for the show. But can this week's numbers keep Uncle Greenspan's band from ending on a sour note later this month?

By the looks of today's upticks, investors weren't contemplating that scenario. At 10 a.m. EDT, the

Purchasing Managers' Index

for May came in below expectations and boosted the market still deeper into positive territory. Coupled with yesterday's benign economic data, today's report gave further evidence that the

Fed's mission to slow the economy might be bearing fruit.

"We're seeing pretty good conviction," said Brian Conroy, head of listed trading at

J.P. Morgan

. "In the retail sector, May

same-store sales are looking a little light, which is also being taken as evidence that the economy might be slowing."

Lately, the

Nasdaq Composite Index was soaring 155, or 4.5%, to 3555.

In Nasdaq trading,

E-Tek Dynamics

(ETEK)

was jumping 12.1% after receiving an earnings upgrade from

Wit SoundView

.

Juniper Networks

(JNPR) - Get Report

, which saw its shares get bludgeoned during this year's volatile times, was also up, gaining 8.9%.

TheStreet.com Internet Sector

index was bumping up 49, or 6.2%, to 840, with

Yahoo!

(YHOO)

advancing 7 11/16, or 6.8%, to 120 3/4.

ONI Systems

(ONIS)

was taking the Nasdaq by storm, posting a 200% gain in its trading debut.

Goldman Sachs

priced the 8 million-share IPO at $25 a share.

In other tech news, the

Philadelphia Stock Exchange Semiconductor Index

was flying 5.7%, with a 5.5% pop from

Motorola

(MOT)

. The company, which held its analyst meeting yesterday, received an upgrade from

ABN Amro

.

When the chips started to fall for the tech sector earlier this year, many savvy investors started subscribing to technical analysis to gauge their investment strategy. Basically, the strategy is based on setting prices and volumes for where certain issues should trade. But when resistance levels were tested, some investors abandoned big names that brought them huge returns in 1999 and chalked up their losses.

So what kept the tech-heavy tech-confident? "The fundamentals," said Brian Gilmartin, portfolio manger for

Trinity Asset Management

. "You have to separate price from value and you can't invest solely on short-term changes in the stock price, which is why I don't follow technical analysis."

But others aren't so sure that growth will shine in a slowing economy. "Ultimately, hitting earnings estimates when the economy is slowing down won't be seen as a positive," said Gary Campbell, CIO of

Commerce Funds

, referring to how earnings will have to surpass expectations to maintain the psychology keeping growth stocks' lofty multiples propped up.

Nevertheless, many pundits are hopeful the market's oversold condition can amount to some buying, at least for a little while. "It looks impressive," said Larry Rice, chief investment strategist at

Josephthal

. "Even yesterday, with fairly good breadth numbers. The market is broadening out instead of contracting and I think the rally will continue through next week." Rice expects no change in the May

employment

number, set for release at 8:30 a.m. tomorrow.

Lately, the

Dow Jones Industrial Average was mounting 110, or 1.1%, to 10,633, with

Hewlett-Packard

(HWP)

leading the way. The tech giant, which slumped yesterday, was hopping 11 3/16, or 9.3%, to 131 3/8, after Wall Street received positive vibes from the company's analyst meeting yesterday.

Elsewhere, the interest-rate-sensitive financials were bouncing as Treasuries continued to rally. The

American Stock Exchange Broker/Dealer Index

was up 4.1% and the

Philadelphia Stock Exchange/KBW Bank Index

was up 2.7%. The benchmark 10-year note was up 22/32 to 102 8/32, its yield easing to 6.19%.

The

Dow Jones Transportation Average

was pumping up 2%, with planned merger partners

UAL

(UAL) - Get Report

and

US Airways

(U) - Get Report

faring better.

But not everyone was a winner in the rally, as oil and gas stocks, which began a power play by investors in the past weeks, were losing fuel. The

American Stock Exchange Oil & Gas Index

slipped 1.9%, with losses from

Chevron

(CHV)

.

Market Internals

Breadth was positive on both the NYSE and the Nasdaq on moderate volume.

New York Stock Exchange: 1,826 advancers, 988 decliners, 566 million shares. 53 new 52-week highs, 24 new lows.

Nasdaq Stock Market:

2,539 advancers, 1,226 decliners, 950 million shares. 51 new highs, 73 new lows.

For a look at stocks in the midsession news, see Stocks to Watch, published separately.