Pacing in the waiting room, distracted only by the earnings reports flashing on the TV, investors are again waiting to see the patient. During yesterday's visit, the market, covered with blood-soaked gauze following
Monday's injury, showed encouraging recovery.
Today, even with all the major indices solidly in the green, the market's calm yet pleasant condition is harder to diagnose or make meaning of. There's some resting and some buying going on, but at no one's expense -- a break from the recent violent tug-of-war between the beaten-down renegades (cyclicals, small-caps) and the long-time leaders (
high-techs, Internets and drugs).
As the Internet tots grab back their cash --
TheStreet.com Internet Sector
index was surging 34, or 5.7%, to 630 -- the
Morgan Stanley Cyclical Index
was sitting up 0.5%. And while the
American Stock Exchange Pharmaceutical Index
rallied 2.4%, the smallish-cap
was enjoying a move up 9, or 2.2%, to 424. The truly small-cap
S&P SmallCap 600
was up 1.6%.
Many market watchers agree that neither the intensity of Monday's rotation nor the remarkableness of yesterday's recovery means that
the week-old rotation is over.
Robert Harrington, co-head of block trading at
, said: "This bounce in the Internet stocks is pretty hard.
But even with this Internet trading rally, I think we'll see some broadening out. This rotation theme is still running; it has not worked its way through yet.
"People did what they had to do short-term to get their exposure out of tech and into cyclicals to have the right mix based on valuation and what's going on in the economy. Now they're taking a step back, looking at it and getting more
price-sensitive about what they do next. It's not always one direction or another. People are going to be less aggressive about putting in their strategy than the last three days -- they just did that in a pretty violent way. They're more picky, it's a digestion."
And Carl Bhathena, vice president of
Holland Capital Management
in Chicago, argues that none of the past few sessions' excitement means that the leadership question has been satisfactorily answered.
"The market continues to look for leadership," he said. "Valuations have reached obviously high levels, and so we've seen some sector rotation. But this is not clear-cut. Techs have been seeing something of a correction for a while. You have stocks like
getting really punished, bringing up year 2000 sector concerns on top of PC growth issues. You've seen
get caught up in the consolidation process. That's a company we're positive on long-term but, like health care until very recently, is part of a consolidation."
As one of the two most negative influences on the
Dow Jones Industrial Average
, IBM, down 0.9%, still appears to be the victim of portfolio-reorganizing investors. Lately, the Dow was up 52 to 10,501, off its session high of 10,553.65. Pushing the blue-chip index higher were the economically sensitive
and drug maker
Johnson & Johnson
were having mixed responses to earnings reports. The broader
was up 17 to 1323.
Over in techland, the
Nasdaq Composite Index
was rising 52 to 2462. The
Morgan Stanley High-Tech 35
was lifting 3.3%, and the
Philadelphia Stock Exchange Semiconductor Index
was climbing 6.8%. Both
were shrugging off positive earnings news, although obviously with the former, beating the lowered estimate wasn't much to be proud of.
Bhathena, who sees the market moving higher after the current consolidation phase, said he's waiting to see "how the interest-rate front turns out and how we make it through earnings season to see how long this consolidation will last."
"As soon as we hit
Dow 10,000, some people were talking about 11,000 as the next hurdle," he went on. "But you can understand it. What we need is the long-bond to rally, to really reflect the lack of inflation before stocks can move to higher highs. This is a rally in the long bond -- the
hands seem to be tied for a little while, and the market seems comfortable with the Fed's position."
The 30-year Treasury was up 5/32 to 96 9/32, sending its yield to 5.50%. (For more on the fixed-income market, see today's early
Stock market internals remained positive. On the
New York Stock Exchange
, advancers lead decliners 1,813 to 1,022 on 514 million shares. The ups had the downs 2,172 to 1,492 on 642 million shares in
Nasdaq Stock Market
activity. New 52-week highs were outpacing new lows 27 to 11 on the Big Board and 47 to 32 on the Nasdaq.
Wednesday's Midday Movers
Three Dow stocks have posted first-quarter earnings thus far today. Coke earned 29 cents a share, in line with the 15-analyst First Call estimate and up the year-ago 34 cents; Exxon earned 47 cents a share, beating the 20 analyst consensus of 46 cents, down from the previous year's 76 cents; and Goodyear earned 90 cents a share, matching the 5-analyst estimate and down from $1.09 last year.
yesterday reported first-quarter earnings of 46 cents a share on strong sales of lead drugs
, better than the 35-cent First Call estimate and up from 35 cents last year. But
Morgan Stanley Dean Witter
was not impressed, and today downgraded the stock to neutral from outperform. Amgen lately was down 5 3/16 to 63 3/4.
Shares of data transmission software maker
are surging 3 5/8, or 6.8%, to 56 3/4 after the company posted first-quarter earnings of 3 cents a share, beating the 4-analyst First Call estimate of 2 cents, and up from a loss of 7 cents a year ago.
looked at Aware's growth-potential back in March.
was lately up a whopping 40 3/16 to 180 11/16 after the company last night reported second-quarter earnings, excluding charges, of 82 cents a share, up from 25 cents a year ago and well in excess of the 15-analyst consensus of 59 cents. Including the charges, the company lost 59 cents a share.
In other earnings news: