Today's Market: Start Whistling, Stocks are Jumping

<LI>Dow and Nasdaq climb.</LI> <LI>Personal income rose more than expected in November.</LI> <LI>Ford and Viant lower after warnings.</LI>
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(Updated from 10:03 a.m.)

The market was infused with holiday cheer this morning, and tech stocks were running.

The bulls can't help but feel encouraged by yesterday's action on the

Nasdaq. After seven straight days of heavy losses, the tech index managed to keep its head above water. It closed up amid heavy trading volume and high volatility -- and despite a wash of earnings warnings the night before.

In an effort to reshuffle portfolios for the year-end, investors are scouting out a few more bargains today. Still, yesterday marked only a small victory. The Nasdaq closed just 7.34 points higher, or 0.31%, to 2340.1. And 705 stocks on the tech index hit 52-week lows. Most market-watchers are skeptical about whether a bottom has been reached.

Lately, the Nasdaq was up a healthy 148 to 2488. The

Dow was up 120 to 10,606. And the

S&P500 was gaining 25 to 1300.

The earnings news basket was mixed last night, with automaker

Ford

(F) - Get Report

and Internet consulting firm

Viant

(VIAN)

warning and

3COM

(COMS)

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.

TheStreet.com

wrote separate stories about

3Com and

Viant. Ford is off 3.4% and Viant was losing 3.6%. 3Com was gaining 13.5% after weeks of falling lower.

Litton Industries

(LIT) - Get Report

is jumping 24% on news it is being acquired by Northrop Grumman

(NOC) - Get Report

for $5.1 billion in cash, including the assumption of $1.3 billion in debt. Litton was the most actively traded stock in preopen trading. 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. The common-stock offer price for Litton represents a 27.7% premium above Thursday's close.

TheStreet.com

took a look at

the deal

The Economy

Fears abound about whether the

Federal Reserve can rescue the economy from what some perceive to be the brink of recession. In that prism, economic data releases remain major market-movers.

Some fear that a drop in investor optimism from recent market weakness could aid a potential economic recession.

PaineWebber

said yesterday that investor optimism was dropping along with stock prices. The company's Index of Investor Optimism fell 38 points in December, with investors citing concern about the slowing economy and continuing fallout from the presidential election debacle.

But other numbers out this morning showed the economy grew just a tick faster in November than economists had expected.

Durable goods orders showed that the value of orders received by manufacturers for long-lasting goods rose more sharply than expected for the month. The number came in at a 2.3% rise vs. expectations of a 1.6% rise and October's 5.6% drop.

Personal income and consumption, meanwhile, showed that personal income and spending grew a tenth of a percentage point faster than economists were expecting. 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.

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 the cut comes. The Fed did switch its outlook about the economy to say the risks of recession now outweigh the risks of inflation.

A couple of handheld computer companies --

Palm

(PALM)

and

Research in Motion

(RIMM)

-- got slammed yesterday despite meeting analysts' earnings forecasts the night before. Of course, the handheld computer companies haven't been hurt as badly as other technology stocks in the past six months. Sometimes Wall Street generates a buzz about a company it expects to beat earnings estimates. This rumored and wished-for estimate is called a

whisper number. And Palm and Research in Motion apparently missed their whisper numbers. Today, Palm was up 15% and Research in Motion was jumping 14%.

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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 |

source

) 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 |

source

) 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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International

European and Asian markets had a mixed reaction to the Nasdaq's temporary recovery Thursday.

London's

FTSE

was down 18, or 0.29%. Across the channel, Paris'

CAC-40

was up 9.92, or 0.17%, while Germany's

Xetra Dax

was 50.34 higher, or 0.81%.

The flip-flopping euro was rising again this morning, trading up to $0.9237. It has been gaining slowly in the past few weeks as the U.S. dollar weakens in the face of a slowing domestic economy.

Japan's markets had a mixed reaction to the Nasdaq's bounce Thursday. Japan's

Nikkei 225

rose a meager 3.87, or 0.03%, to 13,427.08 as worries grow that the country's economy may be headed for a recession. Two days ago, the Nikkei closed below the key 14,000 mark for the first time in almost 22 months.

Hong Kong stocks rose more robustly, however. The

Hang Seng

closed up 78.89, or 0.54%, to 14,738.21.

The greenback was higher against the yen to 112.40 yen.

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