For the past week or two, the market has followed a fairly predictable pattern: A big company warns after the closing bell and sends the market scrambling in the next session.
It should have followed, then, that when chipmaker
warned it would
miss fourth-quarter earnings because of weakening PC sales last night, the
Nasdaq should have been sent into a tailspin, but they weren't.
Analysts came out with negative notes, but that didn't hurt the stock. In fact, Intel was the most actively traded stock in recent trading, up 4.8% to $33.94.
Over the past month, the market has tanked on all kinds of news, so why was this different? 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
in the past two weeks.
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
interest-rate cut in the near future.
Also, there's talk that the presidential election could see some resolution today.
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 will last.
The Comp was receiving some major lift from fiber-optics company
and telecommunications equipment maker
, both posting big gains.
Over on the Dow, tech stocks were putting defensives to shame. Intel,
were all up.
weren't slacking though, adding about 30 points to the blue-chip index.
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When the market does well, so do brokers and dealers. The
American Stock Exchange Securities Broker/Dealer Index
was jumping 6.1%.
Morgan Stanley Dean Witter
got a boost today after
upgraded the stock to accumulate from neutral. The note said the stock was upgraded because of its unusually attractive valuation.
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 6.3%.
Check Point Software Technologies
got the blue ribbon. Yesterday, the Israeli company received
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 9.2%.
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Treasury note and bond prices fell after the November
) showed that last month's wages and salaries rose at the fastest pace in nearly two years. That threw 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 8/32 at 103 1/32, lifting its yield to 5.346%.
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 for a gain of 137,000 among economists polled by
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.
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 the current 6.5% by the end of January -- indicated by the price of the February fed funds futures contract -- fell to 90% from 102%.
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