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Investors have walked away unscarred from a kick in the teeth by




After trading down 19 points this morning, the tech-heavy

Nasdaq Composite Index was lately ahead about 30 points. The

Dow Jones Industrial Average, behind 80 points earlier today, was also on the plus side, while the

S&P 500 Index was gaining almost 1%.

Yesterday after the market closed, Cisco said its fiscal third-quarter earnings would miss analysts' expectations and announced that it will write down an

astonishing $2.5 billion in parts -- a sum equal to the inventory the networker was carrying at the end of last year. The company also reported that it would eliminate 8,500 jobs. In the face of the news, which by all accounts is bad, Cisco was recently lower only 1.7% to $16.88. Earlier this morning, it had been down more than 7%.

"Because of the minefield of earnings news we've already had, people were braced for this news," said Peter Coolidge, managing director of trading at

Brean Murray Foster Securities

. "The market didn't like the news, but it has shock absorbers for it." Today's reaction, Coolidge said, gives encouragement to investors who think we've seen an interim bottom.


analyst community's response to the Cisco report seemed to confirm that notion. With this warning, they said, Cisco may finally have put the worst news behind it. Things can only get better, said

Goldman Sachs


Lehman Brothers


W.R. Hambrecht


Credit Suisse First Boston


A similar call on chip stocks early last week helped propel a four-day rally in tech stocks. But a contrary call out of

Morgan Stanley

yesterday deflated some of those gains.

There is no doubt the fundamentals underlying key technology companies are poor. The business climate "has never been more challenging," Cisco said in its statement yesterday. The company cited continued global economic challenges, the slowdown in the global telecom market and the deceleration in corporate spending for information technology. Still, investors are hanging on the technical piece of the puzzle -- hoping against all hope that the worst is, in fact, over.

Chip stocks were rising, along with drugs, brokers and retailers. Bonds, which have been selling off aggressively the past few days, were near unchanged.

Cisco rivals were trading ahead this morning. The

American Stock Exchange Networking Index

, which tracks the industry, was gaining 0.6%.

Juniper Networks


was climbing 7% to $51.65, while

JDS Uniphase


was gaining 4.3% to $20.74.

Other technology sectors were trading higher as well, despite Cisco's news. Chip stocks, which fell on the Morgan Stanley downgrade yesterday, were lately moving ahead. Shares of



, which reports earnings after the close today, were rising 0.8% to $26.52. Computer hardware companies were up as wel.:


was advancing, along with







Outside of the tech sector, a few Dow bellwethers were rising after reporting strong earnings. Among them were

Johnson & Johnson


and tobacco heavyweight

Philip Morris



Wall Street also has been digesting a heaping of economic reports this morning. The

consumer price index released this morning showed consumer prices rose slightly in March. The index gained 0.1% last month, in line with expectations of economists polled by Reuters. The CPI, a key inflation gauge, measures the change in cost of a representative basket of goods and services such as food, energy, housing and transportation. Today's report reaffirms the belief that inflation is not an important concern as the economy slows.

Industrial production rose 0.4% in March, the government said this morning. It was expected to fall 0.1%. Excluding cars and parts, industrial output in March was unchanged compared to February. It measures the change in production levels at factories, utilities and mines nationwide. In the economic debate, concerns about inflation have taken a back seat to worries about the pace of economic growth in recent months.