The Nasdaq Composite Index and the Dow Jones Industrial Average continued to soar through late morning trading and into the afternoon, as investors showed enthusiasm for a weaker-than-expected employment report. But some market watchers said fundamentals may not justify the gains.
"I'm not sure we haven't moved too far, too fast," said Matt Johnson, head of Nasdaq trading at
. And Owen Burman, an equity portfolio manager at
Riggs Investment Management
, said the market "couldn't justify these prices two months ago and you certainly can't do it now."
Still, investors were ebullient. The Nasdaq lately jumped 192, or 5.4%, to 3775, having traded as high as 3790.36. The Dow was up 162, or 1.5%, to 10,814, off a high of 10,846.08.
Eight stocks added more than 10 points each to the Dow, led by
, which lately was up 8 3/8, or 6.2%, to 142 5/8, and
, which gained 6 11/16, or 5.1%, to 138 5/8.
On the Nasdaq, the biggest gainers include
, up 25, or 15.6%, to 185;
Check Point Software
, up 23 1/4, or 11.8%, to 220; and
up 18 1/4, or 9.6%, to 207 3/4.
Volume was up compared with the past several days of slowed activity, with 724 million shares changing hands on the
New York Stock Exchange and 1.17 billion on the
Nasdaq Stock Market
. Bob Basel, co-head of listed trading at
Salomon Smith Barney
, said money that's been sitting on the sidelines during the market downturn that preceded this week's rally is now coming back into the market.
And Basel said this morning's downturn in oil and gas, as well as a hit to drug stocks, is a result of investors taking profits they could use to put into financial companies and technology.
Philadelphia Stock Exchange/KBW Bank Index
was lately up 4.2%, while the
American Stock Exchange Oil & Gas Index
was down 2.3%. Johnson of Lehman Brothers said investors perceive that inflation is coming under control and commodity prices will begin to fall.
that came out this morning from the
showed that 231,000 new nonfarm jobs were created in May, fewer than the 386,000 that had been expected. And unemployment reached 4.1%, higher than the 3.9% rate that was expected. Some market watchers think the
Federal Reserve may hold off raising rates when it next meets later this month.
Lehman Brothers today lowered its estimate of how much more the Fed will raise the target
fed funds rate this year, saying it expects 50 basis points more before year-end, down from its earlier projection of an additional 75 basis points. The fed funds target now stands at 6.5%, up from 4.75% at the beginning of the tightening cycle last year.
The bond market was continuing to rally on the jobs report, although it was off its best levels of the morning. The benchmark 10-year Treasury was up 17/32 to 102 24/32, its yield easing to 6.19%. The yield earlier came close to the psychologically important 6% level.
In other activity,
TheStreet.com Internet Sector
index was surging 66, or 7.8%, to 916, and
TheStreet.com E-Commerce Index
was up 7.4%.
Breadth was strongly positive on both major exchanges, and volume, as mentioned, was going gangbusters.
New York Stock Exchange:
2,157 advancers, 805 decliners, 724 million shares. 90 new lows, 16 new highs.
Nasdaq Stock Market:
2,940 advancers, 975 decliners, 1.17 billion shares. 73 new lows, 22 new highs.
For a look at stocks in the midsession news, see
Stocks to Watch, published separately.