Today should tell whether stocks are developing some immunity to bad news.

The market was doing its best to shrug off brutal earnings news last night from tech leader

Yahoo!

(YHOO)

.

In a repeat of yesterday's early action, the major indices were flip-flopping like fish out of water this morning. Despite yesterday's downgrades on a few networking systems providers and extreme volatility through the early afternoon, the Nasdaq and the Dow managed to rally into the close.

The Nasdaq, Dow and

S&P 500 have switched sides of the fence no less than four times each already this morning. The Comp was lately in the green, while the Dow and the S&P 500 were in the red.

If the Nasdaq rally holds until the close, it would mark its third consecutive up day in a long, long time. The Comp rose 45.4 points Tuesday to 2441.3 and 82.9 points to 2524.2 yesterday.

Weakness in biotechnology stocks was countering strength in the PC makers and some networkers and opticals. Yahoo! was the most actively traded stock on the Nasdaq, and was falling 14.6%, or $4.44, to $26.13. The second-largest pure-play Internet company after

America Online

(AOL)

, the company forecast 2001 earnings per share of 33 cents to 43 cents compared with analyst forecasts for as much as 59 cents a share last night.

The company also lowered its 2001 revenue forecast to $1.2 billion to $1.3 billion, just a touch above revenues for 2000 of $1.1 billion and falling short of the consensus forecasts from earnings tracker

First Call/Thompson Financial

of about $1.42 billion.

ABN-Amro

and

Credit Suisse First Boston

downgraded Yahoo! this morning.

AOL, in contrast, was up 3.6%, or $1.62 to $46.52.

TheStreet.com Internet Sector

index was falling -- just barely -- lower by 0.1% to 327.8.

Semiconductors were getting hit by several negative reports on the group and

Intel

(INTC) - Get Intel Corporation (INTC) Report

.

Lehman Brothers'

analyst

Dan Niles suggested that investors sell all their semis stocks if the sector rallies. The

Philadelphia Stock Exchange Semiconductor Index

was lately up 2%.

Biotechs were also falling as investors took profits following a ripping two-day rally in this sector yesterday. The

Nasdaq Biotechnology Index

, which rose 6.8% over the two-day period to 948.8, was lately down 0.5%

PC makers seem to be enjoying a golden moment, however. This group was in good shape despite a negative report on

Hewlett-Packard

(HWP)

and

IBM

(IBM) - Get International Business Machines (IBM) Report

issued this morning. H-P was up 2.2%, while IBM was down 0.7%.

Old industrial stocks continued to take down the Dow today, though more traditional defensive stocks like the consumer staples were faring better than they did yesterday.

Minnesota Mining & Manufacturing

(MMM) - Get 3M Company Report

and chemicals company

DuPont

TheStreet Recommends

(DD) - Get DuPont de Nemours, Inc. Report

were the biggest losers on the Dow, cutting a joint 22 points from the blue-chip index. But toothpaste titan

Procter & Gamble

(PG) - Get Procter & Gamble Company Report

, one of yesterday's worst Dow performers, was down only 0.5%. The

Morgan Stanley Consumer Index

was off only 0.9%.

The real strength in the market right now is investor optimism that the

Federal Reserve will cut interest rates by another half-point at the end of this month. The Fed's policy making body, the

Federal Open Market Committee, meets Jan. 30 and 31 to decide on interest rates. Last week, the Fed dropped the benchmark

federal funds rate 50 basis points to 6% in a surprise intermeeting move.

Still, it remains to be seen whether the market can take the Yahoo! news in stride.

It perhaps was no surprise that Yahoo! guided earnings estimates down for this year in its conference call last night. Companies are expected to issue disappointing outlooks this earnings season. With the shrinking dot-com universe and slowing economic growth taking a major toll on online advertising, pretty much all of the analysts were expecting Yahoo! to warn about coming quarters. But analysts were shocked by just how much Yahoo! slashed and burned.

Motorola, the world's second-largest cell-phone maker, meanwhile, was rising, up 3.8%. The company

met already lowered fourth-quarter earnings expectations last night, though it reported a decline in profit and said handset sales fell 20% in the quarter.

In a conference call with analysts this morning, Motorola said it wouldn't provide specific guidance for 2001 until it reports its first-quarter earnings.

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Sector Watch

Commodity-related stocks continue to sink. The

Philadelphia Stock Exchange Gold and Silver Index

was down 1.4% and the

Philadelphia Stock Exchange Forest & Paper Index

was slipping 1.8%.

Meanwhile, transportation, utility, drugs and tobacco stocks were all lower. The

Dow Jones Transportation Average

was falling 0.5% and the

Dow Jones Utility Average

was 2.9% higher. One of the Dow's best performers last year, tobacco heavy-hitter

Philip Morris

(MO) - Get Altria Group Inc Report

was slipping 3.4%, and the

American Stock Exchange Tobacco Index

was off 0.98%.

The

Amex Airline Index

was rebounding from yesterday's slide however, up 0.5%.

AMR

(AMR)

, the parent of American Airlines, which recently announced plans to consolidate with now-bankrupt

TWA

(TWA)

, was also bouncing back from yesterday's selloff, up 0.5%.

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Bonds/Economy

Bond prices were basically flat following a much weaker-than-expected weekly

jobless claims report this morning. The benchmark 10-year

Treasury note was lately up 1/32 at 104 29/32, yielding 5.094%.

Jobless claims for the week ending Jan. 6 fell to 345,000 from a revised 381,000 for the prior week. Economists had been forecasting 374,000 for the week.

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