Updated from 4:05 p.m. EDT
Betting that the
Federal Open Market Committee will leave rates alone at its meeting over the next two days, investors indulged in a pre-decision rally.
Blue-chips led the way as the
Dow Jones Industrial Average
benefited from good news in a number of its components, ending the session up 138.24, or 1.3%, to 10,542.99. Consumer products giant
Johnson & Johnson
was a big contributor, rising 6.1% after
upgraded the stock and added it to its list of highlighted stocks.
Financial stocks including
were also a big part of the gains. The
American Stock Exchange Broker/Dealer Index
"It's a relatively quiet day on the volume, but the realization is that the Fed is not going to act," said Dan Ament, associate vice president and investment executive at
in Minneapolis. "This is not a big day by any means, but there is some money coming off the sidelines. And we could have an interesting few days given that this is the end of the quarter and we could see some window dressing," he said.
rose 2.4% on what seemed to be general enthusiasm for boxmakers.
is being held this week in New York.
Also on the move in the Old Economy were
and industrial conglomerate
. Corning soared 20 3/16, or 8.4%, to 260 3/16 after news it won a supply deal worth more than $1 billion.
Tyco tacked on 5 5/8, or 13%, to 48 7/8 after it said it amended earnings-per-share for 1999 and the first quarter of 2000 following a
Securities and Exchange Commission
Nasdaq Composite Index
was overshadowed by the focus on Old Economy stocks, though it did sport a decent gain of 66.69, or 1.7%, to end the day at 3912.03. The
rose 13.83, or 1%, to 1455.31. The small-cap
rose 5.95, or 1.2%, to 516.36.
TheStreet.com Internet Sector
Index did not follow the Nasdaq's modest lead. It lost 19.09, or 2.3%, to 818.77.
Market observers agreed that today's action looked like many investors were moving preemptively on the Fed's decision, or that they are only just now cottoning on to the fact that it is extremely unlikely the central bankers will do anything other than leave rates on hold.
"It's just an excuse to rally -- even though the market doesn't expect the Fed to hike," concluded
equity strategist Peter Boockvar.
Earnings Season Right Around the Corner
Boockvar suspects the Fed's likely inaction will give the market a few days worth of rally. Once Wednesday passes, and the decision is over and done with, he expects the focus will shift to corporate profits -- or the lack thereof.
"We focus on earnings, we focus on potential pre-announcements and we focus on whether the slower economy has had an effect," he said.
There is some concern on that front. Earnings tracker
has noted that, over the past two weeks, more analysts have lowered earnings estimates on the year than raised them. Moreover, a number of strategists and economists have expressed frustration with many company analysts' refusal to cut earnings estimates. They say analysts are expecting the economic status quo to remain unchanged when they should be more carefully considering the effect of a slowing economy on the companies they follow.
We're definitely seeing the results of the Fed intervention, said Ament, adding that the market now has to think about the sustainability of corporate profits.
Breadth was positive on both exchanges on moderate volume.
New York Stock Exchange: 1,479 advancers, 1,346 decliners, 887 million shares. 41 new 52-week highs, 56 new lows.
Nasdaq Stock Market: 2,129 advancers, 1,873 decliners, 1.3 billion shares. 68 new highs, 95 new lows.
Back to top
Most Active Stocks
NYSE Most Actives
- Motorola (MOT) : 32.4 million shares.
AT&T (T) - Get Report: 25.5 million shares.
Philip Morris (MO) - Get Report: 20.4 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Report: 39.5 million shares.
Microsoft (MSFT) - Get Report: 23.7 million shares.
Worldcom (WCOM) : 23.8 million shares.
Back to top
Tobacco stocks were strong.
said Sunday that it had reached an agreement to acquire
, and that after the deal concluded it would spin off its Kraft division. Philip Morris was up 15.5%, and Nabisco was up 2.2%.
R.J. Reynolds Tobacco
agreed to buy
Nabisco Group Holdings
. RJR was up 5.6%, and Nabisco Group was up 3.7%.
Amex Tobacco Index
was up 3%..
U.S. and European scientists announced today that they've finished a draft of the map of the human genetic code. The
Amex Biotechnology Index
ended up 3% after some mid-session wavering
, which led the research with U.K-based
Wellcome Trust's Sanger Center
, fell 11.8%.
Back to top
The Treasury market is modestly higher, as favorable supply conditions are trumping stronger-than-expected data on
existing home sales
Existing home sales rose 4.3% in May to 5.09 million. Economists polled by
had forecast they would be unchanged at 4.88 million, on average. Home sales quickened in spite of the fact that mortgage rates soared to a five-year high in May. Those rates have since retreated.
President Bill Clinton
today announced a substantial upward revision to the projected federal budget surplus for the year, from $167 billion to $211 billion. Together with larger projected surpluses in future years, that will allow the federal government to pay down its debt by buying back all outstanding Treasury securities by 2012, Clinton said. The last time budget projections were revised, in February, the White House said the paydown could be completed by 2013.
However, many bond market participants are
skeptical a full paydown of Treasury debt will ever come to pass. It's not possible to accurately forecast economic and political developments so far into the future, they say.
The benchmark 10-year Treasury note rose 18/32 to 102 26/32, its yield at 6.109%.
Back to top
European markets were higher.
finished up 13.7 to 6405.2. Finance shares led, while Internet stocks dropped -- particularly
. The company posted poor fourth-quarter numbers and said it has so far failed to find a buyer.
Volume was thin, as many investors were more focused on
than the ups and downs of the market. And they only just got back from
closed up 40.91 or 0.6%, to 6586.26, while Frankfurt's
gained 46.78, or 0.7%, to 7027.19.
The euro was at .9363 against the dollar.
Asian markets were mixed overnight after the Nasdaq's fall Friday and ahead of the upcoming Fed meeting.
Japanese markets did not stray far from Friday's close, and the
index fell 37.81 points to 16,925.40.
The dollar traded at 105.64 against the yen.
index gained 240.83 points, or 1.5%, to 15,978.91 in low volume, largely swayed by moves in index heavyweights
Elsewhere in Asia, Korea's
index gained 12.61, or 1.6%, to 791.55, while Taiwan's
index lost 155.37, or 1.8%, to 8529.56.
Back to top