(Updated from 4:16 p.m.)
The month-old alleged bull came face-to-face with its first big challenge today, and it held up well. Technology and
blue-chip stocks shrugged off a weak
employment report, surprising skeptics of the recent market run-up.
In late-day breaking news, memory chipmaker
announced that a U.S. District Court had ruled against it in a patent-infringement suit it brought against chipmaker Infineon
Before the news was announced, the company's shares were halted on the
Nasdaq after tumbling 14.6%. Infineon closed up 5.3% to $42.40.
Stocks skidded this morning after a weak employment report showed that unemployment rose to 4.5%, above the 4.4% expected by Wall Street and at its highest level since October 1998. The data also showed that payrolls in April declined by 223,000, the largest one-month decrease since February 1991. A 5,000
in payrolls had been expected.
But later the major averages had reversed course. The
Dow Jones Industrial Average closed up more than 150 points, more than erasing its morning 123-point skid. The index has risen 16% from March 22 through yesterday's close. Similarly, the Nasdaq Composite Index was higher, too, and it closed up by 45 points. The tech measure is 34% above its April 4 low.
Traders said comments from 1600 Pennsylvania Ave. indicating concern about the economy helped to placate lower Manhattan. At 10:15 this morning,
said that he remained very concerned about the strength of the economy. "It is entirely possible that the 2% growth rate will be revised downward," White House spokesman Ari Fleischer said. "The
jobless data is evidence of that potential development."
"The White House statement raised hopes about a 50 basis-point cut on May 15," said Nick Angiletta, head of retail trading at
Salomon Smith Barney
. "Stocks turned up sharply right after that announcement."
While the weaker-than-expected numbers unsettled the markets this morning, the big question for Wall Street is what these numbers portend for the economy, the
Federal Reserve's rate-cutting initiatives and the nascent market rally. Now the consensus seems to be that the Fed will be aggressive at its next official meeting.
Still, traders were loath to say that this afternoon's advance legitimized the recent rally as an indicator of a bull market. "I'm surprised the market rebounded," said Ken Sheinberg, head of listed trading at
. "I think we're in for a rude awakening; I just don't think the averages should be up at these levels."
Raising the bar on jitters is the impressive bull run of the past month. On Thursday, the Nasdaq shed 3.6% to 2146.20, and the Dow eased 0.7% to 10,796.65. But that retreat came after a month of gains so large that some investors were questioning whether the market had gotten a bit ahead of itself. Many thought yesterday's pullback was in order.
Some tech stocks came back this afternoon, with
, the biggest mover on the Nasdaq, closing up 5.3% to $19.64.
closed up by 2.8% to $22.18.
The chip sector was down, though, with the
Philadelphia Stock Exchange Semiconductor Index
, or SOX, closing off by 1.2%. But chip giant
closed up by 1.6% to $30.88.
closed off by 0.3% to $19.75 after
put out a note forecasting revenue growth below the company's estimates, while maintaining its market perform rating.
closed up by 3.2% to $70.75 after a mildly bullish note from
Henry Blodget this morning. Blodget said he sees "slight upside" to Microsoft's earnings targets for the June quarter that could help boost the shares now.
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