The market hasn't shaken the election uncertainty monkey yet, but it sure acted like it today.
When the high court announced it was lobbing the case concerning the vote recount back to the Florida Supreme Court, the major indices shot upward. They fell back a bit on digestion of the information, but then climbed back up, this time even higher.
Dow closed up 187.4 to 10,561; the
Nasdaq ended the day off by 29 to 2616 -- above the latest support level of 2600. The
S&P 500 closed up 9.82 to 1325.1, and the small-cap index
Russell 2000 was down 6.44 to 450.
Although the news didn't declare a winner in the presidential bid and didn't indicate any immediate closure, the market took it as a step closer to resolution and a victory for George W. Bush.
The market digested a ton of data, including rumors, merger announcements and research notes mixed in with some optimistic economic indicators.
The Dow made triple-digit gains with help from all but four components.
was the blue-chip contributing the most to the index on reports that
exec James McNerney Jr. would succeed CEO L.D. DeSimone, who is expected to resign next year. The diversified-product maker, best known for its Scotch tape and Post-It Notes, was hitting all-time highs and closed up $5.38 to $105.
Today's "flight to quality" boosted
Over the weekend,
finally accepted a proposal -- worth more than $13 billion. The lucky suitor was
, if you hadn't already heard. Investors seemed happy with the news and were lifting both parties on the news. It helped that Pepsi said the acquisition would increase its revenue growth rate by 7% annually.
Another marriage attracting attention was
agreement to buy
for about $1.6 billion in stock. Both companies distribute pharmaceuticals.
Merger-mania Monday also saw
, the No. 1 chicken processor, making a $2.8 billion bid for
, the biggest pork processor in the nation. As is usually the case, the aggressor, Tyson, was lower on the news, while the target, IBP, was boosted.
was an investor favorite after it signed a cross-licensing deal with
and a pact of understanding with China's Ministry of Information Industry for deployment of its proprietary CDMA technology in China. The pact with China's government means it may finally do a deal with China's No. 2 wireless carrier
. Qualcomm said China Unicom could begin awarding contracts to build a 10 million subscriber network using the CDMA technology by 2001. Qualcomm closed up 8.4% to $90.
In an effort to revive an area of tech,
analyst Dave Kang recommended buying such optical networkers as
on "trading weakness." The good news seemed to work, with Corning closing 0.9% higher, JDS ending up by 4.2% and Digital Lightwave lifted by 3.2%. The optical networkers were some of the last tech "growth" stocks to fall.
The raspberry of the day goes to
, which lowered its fourth-quarter and 2001 first-quarter EPS estimates because of a decrease in orders for its products. The stock closed down by 41.4% to $5.97.
And then there was
, which on Friday called a credit rating downgrade by
"disappointing" in light of the company's turnaround plan.
Moody's cut the company's senior unsecured debt to junk status. In response, the Stamford, Conn., copier- and office-equipment maker said its plan -- which includes asset disposals, cost reductions and a refocusing of its core businesses -- will keep its liquidity sufficient. According to a report, Xerox, which has been fighting off rumors of liquidity concerns in recent weeks, also handed out layoff notices this week to 200 workers in the Rochester, N.Y., area, on top of 350 administrative staff who were let go last month. Xerox closed down 20% to $5.
Meanwhile, as more data showing an economic slowdown accumulate, the likelihood grows of a change in the Fed's policy outlook on inflation when it next meets Dec. 19. This is important because a move away from a bias toward concerns about inflation is the first step towards an interest-rate cut. And lower rates help stimulate economic growth by letting consumers and companies borrow money more cheaply.
new home sales came in this morning at 928,000, a little higher than the expected 910,000 but down from the previous month's 946,000. The report measures the selling rate of new one-family houses and is important because, historically, changes in consumer spending patterns have appeared first in autos and housing.
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Philadelphia Stock Exchange Computer Box Maker Index
was enjoyed the green today, ending 1.3% higher. Components
all climbed along with it. Earlier today, Sun said it was paying $400 million to acquire HighGround Systems, a privately held data storage management company.
Defensive stocks were strong today. The
Philadelphia Stock Exchange Forest & Paper Products Index
closed up by 3.5%, the
Morgan Stanley Commodity Related Equity Index
rose 2.96% and the
Morgan Stanley Cyclical Index
moved up 3.3%.
Internet-related stocks suffered, again, with
TheStreet.com Internet Sector
index, or DOT, falling 2.7%, and
TheStreet.com E-commerce Index
dropping 6.1%. Fears of slowing ad sales haven't abated, and there are those who say some Internet companies are still overpriced.
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Treasuries were rallying on increasing optimism that the
Fed will lower interest rates in the months ahead, but news of the Supreme Court's statement -- which gave Bush a temporary victory -- put pressure on the market. V.P. Gore is seen as being more bond friendly.
The 10-year note lately was unchanged at 101 23/32, yielding 5.518%.
Wall Street Journal
reported that the Fed is "leaning heavily toward" changing its assessment of the economy at the
Federal Open Market Committee's next meeting on Dec. 19. Such a move is seen as the first step in a process that could eventually lead the Fed to lower interest rates.
statement it releases after meetings, the FOMC opts for one of three assessments of the economy. Either the risk of rising inflation is paramount, or the risk of slowing growth is paramount, or the two risks are in balance. Since early 1999, the committee has declared inflation the greater risk. It will probably switch to a risks-balanced assessment on Dec. 19, the Journal story suggests.
In economic news,
new home sales
) fell 2.6% to 928,000 in October, somewhat less than they were expected to, from 953,000 in September. Economists polled by
had forecast a larger drop, to 909,000 on average. Mortgage interest rates have fallen sharply since May, aiding the housing sector.
index of leading economic indicators
) fell 0.2% in October, in line with expectations. The index has fallen or been unchanged for seven months in a row, portending slower economic growth in the months ahead.
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