Market Update: Major Indices Gallop Ahead on Broad-Based Buying
The market hasn't stopped its running today, turning this morning's sprint into a steady gallop. Led by technology stocks, the
Nasdaq Composite Index is doing its best 1999 impression, bulled higher by just about every sector group within technology, while the
New York Stock Exchange shows broad interest. The
S&P 500 was strong, lately up almost 1%.
After erasing all of January's 14% gain earlier this month, the Comp was lately up strongly.
Ciena
(CIEN)
should be thanked. The optical networking gear equipment maker
announced earnings that beat Wall Street's estimates for its fiscal first quarter and, more importantly, said that it expects its business to grow faster than the overall market. Investors were cheerier for the news, pushing Ciena up 19.6%, and helping the
American Stock Exchange Networking Index
to a 5.8% gain.
Cyclical and technology stocks were assisting the Dow. The leaders included
3M
(MMM)
, which was down sharply yesterday, as well as the technology components.
Optical stocks, up yesterday after
TheStreet Recommends
Sycamore Networks'
(SCMR)
better-than-expected second-quarter earnings results, are strong again. Sycamore was lately up 11.9%, while
Corning
(GLW)
was gaining 11.4%.
The
Philadelphia Stock Exchange Semiconductor Index
, which tracks the sector, was lately up 6.2%. Investors rewarded chipmakers yesterday on the heels of an analyst upgrade on the sector. Tuesday evening,
Applied Materials
(AMAT)
reported earnings that topped analyst estimates, but the company cautioned about its growth going forward. Despite that warning,
J.P. Morgan Chase
raised its ratings on it and four other semiconductor equipment stocks yesterday, to "long-term buy" from "market perform."
Internet stocks, notwithstanding a downgrade to sell from
Prudential Securities
on
Amazon.com
(AMZN)
, are higher on the day.
TheStreet.com Internet Sector
index, or the DOT, was up 3.2%.
TheStreet.com's
Betsy Riley took a look at the
Amazon news.
In recent trading, the biggest drag on the index was New Jersey-based pharmaceutical giant
Merck
(MRK)
. The drug maker confirmed full-year earnings estimates, but it and other pharmaceuticals are lower as investors move away from defensive-oriented plays like drugs, tobacco and food stocks.
Sector Watch
Transportation stocks looked strong. The
Dow Jones Transportation Average
was lately up 1.1%. Shares of
American Airlines
parent
AMR
(AMR)
were up 4.1%, while
United Airlines
parent
UAL
(UAL)
was 1.9% higher.
Brokerages were also higher today.
E*Trade
(ET)
, now trading on the New York Stock Exchange from the Nasdaq, gained 1.8%, while
Merrill Lynch
(MER)
rose 2.9%.
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Bonds/Economy
Treasury prices are lower for the fourth successive day as the money market trims its hopes of an interest-rate cut next month from 50 basis points to 25. The fall in prices is steepest at the long end, with the 30-year bond two-thirds of a point down. The commercial and jobs data released this morning are slightly positive but still indicative of a softened economy. Yields are a little higher for the notes and fairly flat for the longer-dated maturities.
The benchmark 10-year
Treasury note lately was down 14/32 to 98 17/32, raising its yield to 5.190%.
In economic news,
initial jobless claims
(
definition |
chart |
source
), which track the number of people applying for first-time unemployment benefits, fell to 352,000 in the week ended Feb.10, from 363,000. Economists had predicted a drop to 359,000 in the
Reuters
poll, so the lower number is a good sign. However, the reading is subject to frequent revisions. The four-week moving average rose to 345,000, its highest value since early January.
Import and export prices
(
definition |
chart |
) were mixed for January, with the former down and the latter up. Prices for imports for all commodities slid for the second consecutive month, by 0.4%. The average price increase for the past 12 months has also declined consistently since September; the level now stands at 2.3%. Excluding oil imports, the average monthly and yearly increases were 0.3% and 1.6% respectively. Meanwhile, total export costs were up 0.2% for January and are holding steady at 1.3% in their 12-month average. Excluding agricultural products, the price increases are 0.2% for January and 1% over the past 12 months.
The
Philadelphia Fed Index
(
definition |
chart |
source
), which measures regional manufacturing in Pennsylvania, New Jersey and Delaware, came out below expectations at -30.5. After the steep fall to -36.8 in January, economists had been predicting a more marked improvement than this, forecasting the number would rise to -24. The number indicates contracting activity in factories when below zero, and though it is moving in the right direction, its slow progress indicates the severely depressed state of manufacturing. Almost every Federal Reserve official has commented upon the manufacturing sector's woes, so the latest information is not likely to surprise bond investors.
Finally, the
Consumer Comfort Index
(
definition |
chart ) rose by 4 points to 20, its highest level since the start of the year. The gauge reflects the state of the economy and how people are responding to general buying opportunities.
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