Market Update: Nasdaq Closes Up, but Off Session Highs; Dow Ends in the Red - TheStreet

Market Update: Nasdaq Closes Up, but Off Session Highs; Dow Ends in the Red

With earnings season under way, the market gyrated based on companies' releases.
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(Updated from 3:37 p.m.) So now the Dow knows how it feels.

Yesterday, the

Nasdaq Composite Index spent the day trailing the Dow and couldn't get out of the downside. Today, the Comp closed off session highs, but still firmly in positive territory. The Dow closed in the red by double digits.

The Dow and its components weren't so lucky today. Yesterday, the blue-chip index made healthy triple-digit gains, but today it had a rough up-and-down ride thanks to a flurry of news.

The biggest albatross on the index was Post-It note and Scotch tape maker

3M

(MMM) - Get Report

. The stock, which started a nice run-up in early December that became a steady decline by the year's end, closed down 3.1% to $110. The diversified manufacturer

missed its fourth-quarter earnings estimates, citing a slowing U.S. economy and a strong dollar for the results.

Financial goliath

J.P. Morgan Chase

(JPM) - Get Report

also reported

disappointing earnings; it closed down 0.4% to $53.

There were a couple somewhat shiny points of light on the index, including aircraft maker

Boeing

(BA) - Get Report

, which saw its earnings

handily beat estimates, and

General Motors

(GM) - Get Report

, which also topped expectations, but

tempered that with dropping profits.

IBM

(IBM) - Get Report

was looking good ahead of its post-close announcement. Big Blue ended the day up 4.3% to $96.69.

Also, chipmaking giant

Intel

(INTC) - Get Report

was on the downside after a

post-close earnings announcement that beat lowered estimates, but said little else to encourage investors. It closed down 2.8% to $30.50.

And ,though Intel was the stock everyone was waiting for, it was

Juniper Networks

(JNPR) - Get Report

that

impressed them all. The company beat fourth-quarter earnings and, on top of that, raised its forecast for the full year. Gold star for Juniper, which bounced up 6.4% to $133.19.

Chip-equipment maker

Novellus Systems

(NVLS)

and chipmaker

Applied Micro Circuits

(AMCC)

were two others that reported better-than-expected earnings and were rewarded today.

The market was looking for positive earnings news to help revive it. Investors needed good news to get them back into tech, since right now, about the only catalyst that could help would be another intermeeting move by the

Federal Reserve. Otherwise, we're biding our time to see what happens when the

Federal Open Market Committee meets at the end of the month.

Meanwhile,

Nortel Networks

(NT)

was leading trading on the

Big Board. The company is scheduled to report its earnings Thursday. It closed 8.8% higher to $34.75.

JDS Uniphase

(JDSU)

leaped 11.7% to $53.75 on rumors that the optical component supplier was in talks to sell a Zurich plant to Nortel. A wire service report says the deal is worth $3 billion.

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Sector Watch

Banks and oil were grounded today, while tech-related stocks were flying high.

Bad news in the banking industry put pressure on financials. Yesterday, beleaguered

Bank of America

(BAC) - Get Report

met

lowered estimates and said it expects higher loan losses in 2001. The banking sector got the added bonus of crummy earnings from J.P. Morgan Chase and

Bank One

(ONE) - Get Report

. The

Philadelphia Stock Exchange/KBW Bank Index

sector closed off by 0.95%.

Crude oil prices were on the slide today, pulling down related sectors. The

American Stock Exchange Oil & Gas Index

ended the day down 1.7%, while the

Philadelphia Stock Exchange Oil Service Index

was 4% lower.

Chipmakers got love and affection from investors thanks to good earnings news from Intel, Novellus and

Linear Technology

(LLTC)

. The

Philadelphia Stock Exchange Semiconductor Index

closed 6.3% higher.

The

Philadelphia Stock Exchange Computer Box Maker Index

was up 2.9% with help from the aforementioned component IBM, as well as

Micron Technology

(MU) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

.

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Bonds/Economy

Treasuries began to trade higher today as the markets digested a sizeable amount of commercial data released this morning, with the pricing on the long bond especially strong. Although the latest information was variously mixed, the overall message remains unchanged from that of recent weeks: The weakening economy will need active support from the Federal Reserve.

The benchmark 10-year

Treasury notelately was up 12/32 to 104 7/32, yielding 5.183%.

In economic news, the

Consumer Price Index

(

definition |

chart |

source

), which measures the prices paid for goods and services, provided fresh evidence that a tepid inflation rate is not the problem.

The core CPI -- which measures the prices of goods and services excluding food and energy -- whose prices are volatile, rose 0.2% in December, in line with the expectations of economists polled by Reuters. The annual growth rate of the core CPI remained at 2.6%, its peak level of the year.

Consumer prices of all goods and services, including food and energy, rose 0.2% in December, while its annual rate of increase held steady at 3.4%.

The weekly

Mortgage Applications Survey

(

definition |

chart |

source

) detected increases in refinancing and new mortgages, as mortgage interest rates remained low.

The refinancing index rose from 1572.1 to 2800.6, the highest it's been since October 1998. It has now almost doubled in value for two successive weeks. The purchase index rose to 332.9 from 292.8, continuing its upward trend of the last four weeks.

The

BTM-UBSW Weekly Chain Store Sales Index

(

definition |

chart) fell 0.3%, after rising for four consecutive weeks. Its change from the same period 12 months ago fell to 4.9% from 5.7%, but it remains relatively strong. The

Redbook Retail Average

(

definition |

chart) found this month's sales after two weeks running 2.6% ahead of December's. Sales in January rose by 3.6% compared to a year ago.

Industrial production

(

definition |

chart |

source

) fell 0.6% in December. That was slightly higher than economists' expectations of a 0.5% slide. It is the third consecutive decline and confirms yet again the cooling in the economy.

As production fell, the capacity utilization rate, which measures anti-inflationary slack in the industrial sector of the economy, fell to 80.6%, the lowest since September 1992.

Finally,

real earnings

(

definition |

chart |

source

) fell 0.4% in December after having remained unchanged during the previous month.

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