Market Update: Tech Stocks Bounce Back from Recent Losses
Stocks zoomed higher with conviction at the open this morning as investors scouted out bargains after a seven-day selloff on the
Nasdaq turned itself around yesterday. The market also got a little injection of holiday cheer from this morning's economic data, which showed that while the economy slowed in November, it's not as bad as some had thought.
Both the Nasdaq and the blue-chip
Dow quickly slapped on triple-digit gains this morning and were continuing higher.
It remains to be seen whether they can hold this rally or if they will sputter into the close. An early rally yesterday faded in the afternoon, and the Nasdaq closed just 7 points higher. Market-watchers remain skeptical about whether a bottom has been reached.
The earnings news basket was mixed last night, with automaker
Ford
(F) - Get Ford Motor Company Report
and Internet consulting firm
Viant
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warning and
3COM
(COMS) - Get ComSovereign Holding Corp. Report
beating earnings estimates. Ford announced last night that its
fourth-quarter earnings would come in at 64 cents a share, 10 cents below the consensus analyst estimates of 74 cents. The auto manufacturer also said that it was cutting its North American production schedule for the first quarter of 2001 by 9%, or 107,000 units, to 1.05 million vehicles.
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TheStreet.com
wrote separate stories about
3Com and
Viant. Ford was lately off 2.6% and Viant was losing 3.6%. 3COM was jumping 13%.
Litton Industries
(LIT) - Get Global X Lithium & Battery Tech ETF Report
is flying 24% higher after news it is being acquired by
Northrop Grumman
(NOC) - Get Northrop Grumman Corporation Report
for $5.1 billion in cash, including the assumption of $1.3 billion in debt. Los Angeles-based Northrop said yesterday afternoon that it will pay $80 a common share and $35 per Series B preferred share to make Woodhills, Calif.-based Litton a wholly owned subsidiary.
TheStreet.com
took a look at
the deal
Durable goods orders and
personal income and consumption, out this morning, showed the economy grew just a tick faster in November than economists had expected.
Durable goods orders came in at a 2.3% rise vs. expectations of a 1.6% rise and October's 5.6% drop. Personal income rose 0.4% compared with a 0.2% drop in November. Economists had been expecting a 0.3% rise. Personal consumption rose 0.3%, just above the 0.2% rise seen in October. Economists had been forecasting another 0.2% rise. Personal savings fell 0.8%. Rising income raises the question for the Fed about whether more purchasing power will help consumers push prices higher and increase the risk of inflation.
The final
consumer sentiment index for December, meanwhile, hit 98.4. The initial December calculation yielded 97.4 and economists were forecasting 98.2. That number rose in November, to 107.6, from the October reading of 105.8.
Following the Fed's meeting Tuesday -- when the monetary-policy making body decided to keep interest rates unchanged -- the popular view is that the Fed will cut interest rates when it meets again in January. But some investors, worried about the wave of corporate earnings disappointments and the awful stock market, fear the economy is slowing too fast -- and that the market may be hurt further before any cut comes. The Fed did switch its outlook about the economy to say the risks of recession now outweigh the risks of inflation.
This morning's data allayed some of those fears.
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Bonds/Economy
Treasury prices are higher in thin trading as the market heads for an early close.
Although equities are rallying, the overall economic picture is still troubling investors. The latest data, however, show that demand for durable goods is up slightly, even though consumer enthusiasm for holiday sales remains low.
The benchmark 10-year
Treasury notelately was at 105 19/32, up by 8/32, pushing its yield lower to 5.008%.
In economic news,
durable goods orders
(
definition |
chart |
) rose 2.3% in November, more than the 1.6% gain projected by economists polled by
Reuters
. Durable goods are those that last more than three years. Excluding orders for expensive transportation equipment, which rose 9.1%, new orders were up 0.4% for the month. The year-on-year growth of durable goods was 1.0%, a little higher than last month, but still the second lowest level since Nov. 1998.
Personal income and consumption
(
definition |
chart |
) for November showed that salaries increased a bit after having gone down in October. Personal Income grew 0.4% while spending increased 0.3%. Consumer spending has been low for the year and except for a couple of spikes in summer and fall is back to an unusually low level for year-end.
The
Consumer Sentiment Index
(
definition |
chart ) for December dropped to 98.4 from a November reading of 107.6.
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