Market Update: Stocks Spike on Florida Rulings - TheStreet

At 2:28 p.m. EST, two judges in two counties in Florida ruled that "neither the sanctity of the ballots nor the integrity of the election" was compromised by the irregularities relating to absentee ballots. Stocks initially spiked on the news, which marks a significant victory for George W. Bush and brings the elections closer to resolution. The markets soon afterward returned to pre-announcement levels, however.

Despite a

warning by chipmaking giant

Intel

(INTC) - Get Report

-- something that would typically be terrible news -- the

Dow and

Nasdaq lately were making triple-digit gains.

Intel came out last night saying it would miss fourth-quarter estimates because of slowing PC sales. Analysts lined up to dole out negative notes, but they couldn't hurt the stock. In fact, Intel was one of the most actively traded stocks in recent trading on the Nasdaq, up 4.6%.

Over the past month, the market has tanked on all kinds of news, so why was this different? Some would say it's because the bad news is already priced into the market. The Intel warning was bad, yes, but the market expected it. Investors were prepared for the warning, since "slowing PC demand" has prompted warnings from

Gateway

(GTW)

,

Motorola

(MOT)

and

Apple

(AAPL) - Get Report

recently.

It also didn't hurt that a relatively friendly

jobs report was out this morning. The jobs report showed that nonfarm payrolls -- a measure of net new jobs created -- slowed significantly in November, hitting a 94,000 rise vs. the forecast 140,000. While the other components of

the report were mixed, that payrolls number could give further credence to the idea that the economy is slowing enough to spur an

Fed

interest-rate cut in the near future.

Bulls are celebrating because even before the employment report was released, futures were pointing to a strong opening, in spite of the bad earnings news. The market's ability to shake off bad news is a sign that the worst is behind us.

Still, Tuesday's massive rally and Wednesday and Thursday's selloffs show that investors are continuing to overreact, meaning it's too early to tell if today's rally is sustainable.

The Comp was receiving some major lift from fiber-optics company

JDS Uniphase

(JDSU)

, computer networking company

Juniper Networks

(JNPR) - Get Report

and telecommunications equipment maker

Ciena

(CIEN) - Get Report

, all posting big gains.

Also on the Comp, weak Internet ad sales hit search engine

Ask Jeeves

(ASKJ)

, which was getting the stuffing kicked out of it after last night's announcement that its chief executive resigned and it was revising downward its revenue and loss expectations for its fourth quarter.

Over on the Dow, tech stocks were putting defensives to shame. Intel,

IBM

(IBM) - Get Report

,

Hewlett-Packard

(HWP)

and

Microsoft

(MSFT) - Get Report

were all up. Financials

American Express

(AXP) - Get Report

,

Citigroup

(C) - Get Report

and

J.P. Morgan

(JPM) - Get Report

weren't slacking either, adding a total of more than 40 points to the index.

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Sector Watch

When the market does well, so do brokers and dealers. The

American Stock Exchange Securities Broker/Dealer Index

was jumping 6.7%.

Morgan Stanley Dean Witter

(MWD)

got a boost today after

Merrill Lynch

upgraded the stock to accumulate from neutral. The note said the stock was upgraded because of its unusually attractive valuation. It lately was up 9.5%.

Sliding oil prices have put transports back in the green. The

American Stock Exchange Airline Index

lately was 5.2% higher, while the

Dow Jones Transportation Average

was hopping 2.8%.

TheStreet.com Internet Sector

index hasn't really been embraced in recent weeks, but today the sector, which is also call the DOT, was bouncing xx%.

Check Point Software Technologies

(CHKP) - Get Report

got the blue ribbon. Yesterday, the Israeli company received

Network Computing

magazine's Editor's Choice Award for the "integration, interoperability and breadth of security solutions, applications and hardware platforms it provides" through one of its platforms. It lately was moving up 7.9%.

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Bonds/Economy

Treasury note and bond prices fell after the November

employment report

(

definition |

chart |

source

) showed that wages and salaries rose at the fastest pace in nearly two years last month. That throws cold water on expectations for a near-term interest-rate cut by the Fed to stimulate economic growth, which has been slowing.

The benchmark 10-year

Treasury note was down 12/32 at 102 29/32, lifting its yield to 5.362%.

The economy added fewer jobs than economists expected in November, a sign that growth continues to slow. Nonfarm payrolls grew by 94,000, compared to an average forecast among economists polled by

Reuters

for a gain of 137,000.

The unemployment rate rose to 4% from 3.9%, further confirming that demand for workers is ebbing.

But the average hourly wage rose 0.4% to $13.94 from $13.88, lifting the earnings growth rate to 4%, the fastest since January 1999. A fast rate of earnings growth has the potential to cause inflation to rise by creating more demand for goods and services than the economy can produce. As long as the Fed sees the risk of rising inflation, it will hesitate to lower interest rates, even though growth is slowing.

At the

Chicago Board of Trade

, traders of

fed funds futures contracts downgraded the odds of a near-term interest rate cut by selling the contracts. The odds that the Fed will lower the

fed funds rate to 6.25% from 6.5% this month, indicated by the price of the December fed funds futures contract, fell to about 30% from 41%. The odds of a 25-

basis-point rate cut by the end of January slipped to about 95% from 102%.

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