Wall Street finally seemed to wake up from its long nap.
Ahead of the
Federal Reserve's highly anticipated decision tomorrow on interest rates, investors spent much of the day resting up. It was mostly mild day in the market, though action began to heat up during the afternoon as the
Dow Jones Industrial Average sprinted higher. With gains of 136 points, the blue-chip index escaped the confines of the tight range in which it had traded all day. This upward momentum reverses the market's direction at midday, when the Dow was dragged below the flatline.
"The market is still shell-shocked from Friday's selloff," said Bryan Piskorowski, market analyst at
. After losing more than 800 points last week, the Dow had lately gained more than 100 points. The
Nasdaq Composite Index, off approximately 63% from its all-time high, looked like it might be finally getting its act together after spending most of the day hugging the flatline in slightly negative territory. It was lately firmly in positive territory.
According to Piskorowski, the elusive bottoming process is underpinning Wall Street's malaise today. "It's hard to read too much into today's action," he said. Market internals improved as the final hours of the trading session approached. In recent trading, advancers outnumbered decliners on the
New York Stock Exchange. But there were still more losers than winners on Nasdaq. Volume was light, as many investors kept their cash on the sidelines.
Many investors are hoping the
Federal Open Market Committee, the Fed's monetary policy body, will cut interest rates by 75 basis points to 4.75% when it meets tomorrow. Most economists, however, expect a half percentage point cut. Less than 24 hours before the verdict hits the Street, the uncertainty has kept many market participants out of the game.
Volume, which was quiet much of the day, picked up a little late in the day. Today's action follows a nasty plunge last week, which dragged the Nasdaq and
S&P 500 further into bear-market territory and spun the Dow another leg below the psychologically important 10,000 benchmark.
In the past few months, short-term rallies have followed most major selloffs, as investors have bet on a bottom and rushed in to buy stocks they thought looked cheap. But gains have often failed to stick. Since last April, Wall Street has been trying to find a bottom and has so far come up empty. Now, some say the arrival of a V-shaped bottom -- a steep, precipitous and fear-infused decline followed by a sustained rally -- won't happen at all.
Looking at the sectors driving today's action, drug, cyclical, Internet, gold, and oil stocks rose, while insurance, airline, retail, and consumer staples stocks were lower.
The semiconductor sector was gaining, despite a
seriously negative note from
U.S. Bancorp Piper Jaffray
analyst Ashok Kumar on
. "We have seen with Intel and other technology companies that the
earnings in price-to-earnings has fallen at a faster rate," Kumar wrote in a message to his clients. "If we do enter into a recession in the second half of 2001, it is likely that Intel will retest the valuation lows of 1998, which would take the stock down to the high teens." It was certainly moving closer, with Intel off 2.9% to $27.06.
gained 8.7% to $25.20 even though the fiber-optic manufacturer said it expects 2001 earnings to fall short of Wall Street forecasts due to a slowdown in demand. It stands by its first-quarter outlook. Among other telecommunications stocks,
was also higher, adding 9.8% to $24.63. And shares of
gained 19.8% to $11.97 after the company signed a $5 billion, three-year contract to supply equipment to
Elsewhere in technology,
cut its earnings estimates for enterprise server and storage companies. But since so much bad news has been accounted for within the sector, many stocks were moving higher.
gained 7.2% to $31.95,
, up 8.9% to $30.50,
, higher by 2.8% to $92.60 and
, up 4.5% to $34.40.