Whew!

It was a close one for the

Nasdaq Composite Index, but it still managed to pull out an upside finish. There was no stopping the

Dow Jones Industrial Average, though, which finished on its highs.

Today's rally was fueled by enthusiasm left over from yesterday's rally, darn good numbers from fiber-optics leader

JDS Uniphase

(JDSU)

and

gross domestic product

figures that gave further credence to a slowing economy.

Let's hit JDS first. The fiber-optic equipment maker issued a bullish outlook for coming quarters as part of its third-quarter

earnings report. It gained 3.8% on the news and put a little confidence back into the fiber-optic industry, which needed it after

Nortel

(NT)

showed a

disappointment on the revenue side earlier this week and sparked a selloff among its buddies. Nortel, spent its third straight day as one of the

Big Board's most popular, ended the day with more losses, off 6.2%.

Corning

(GLW) - Get Report

was also one of the most actively traded on the NYSE. It's been falling in tandem with Nortel, but it managed to rebound today. It rose 8.6% to $76.

But the fun in fiber optics was matched by negativity in biotech on news that

Amgen

(AMGN) - Get Report

lowered its

sales projections and its earnings forecast. The news brought down the

Nasdaq Biotechnology Index

5.1%.

Also, among the bad news bearers was

American Power Conversion

(APCC)

, which reported lower-than-expected earnings for the third quarter. It dropped 40%, or $8.50, to $12.75.

You can't just blame earnings for the way this October's gone.

You Can't Make This Stuff Up!

Although everyone cites poor earnings, the

ever-weakening euro and problems in the Middle East as reasons for the strange happenings in the market recently, others see gyrations based on cyclical corrections.

Dan Ascani, president and director of research at

Global Market Strategists

, said the market is right on the money as far as where it should be in a 39-month cycle. Every 39th month, he said, the market bottoms to correct itself. He said this theory predicted the lows that were hit during the 1987 crash, Operation Desert Storm in 1990, problems in 1994 and the Asian market crisis in 1997. Ascani said October 2000 is right on schedule for another adjustment in valuation.

"It amazes me how many people ignore this kind of cycle," Ascani said.

But while the theory works for predicting lows, he said other factors including the aforementioned ones as well as additional cycles act on the market. So, you can't just say "OK, it's the 39th month, I'm going to make some money off of this."

Ascani said seasonal cycles are also a consideration. Oil stocks, for example, are nearing their peaks and probably should be left alone until spring, while many tech stocks are on track to make gains in the next couple months and are in the perfect position for buying. Still, he said you have to look at each stock on its own merits and then check out what cycle it follows.

Meanwhile, the

third-quarter GDP number, which was released earlier today and showed the lowest gain since the second quarter of 1999. GDP grew at a rate of 2.7% in the July-to-September quarter compared to

Reuters

consensus estimates of 3.4%. The report seemed to bode well for the end of the

Federal Reserve's interest-rate-hiking cycle, which Wall Street, of course, has been anxiously awaiting. Not everyone believes it signals an end, though.

TheStreet.com

wrote about why it doesn't mean a moratorium to interest rate hikes in a

separate story.

TSC

also recently wrote about the kind of impact an economic slowdown would have on

earnings growth.

The GDP numbers helped financials, including

J.P. Morgan

(JPM) - Get Report

, which in turn lifted the Dow by adding 75 points to it. The banking giant, which is merging with

Chase Manhattan Bank

(JPM) - Get Report

, jumped 8.8% today. The stock has been climbing in the past week or so from a selloff that started in early September. Chase increased 6.7% today -- the two stocks tend to move in synch with each other since they announced their marriage plans.

Other blue-chips contributing to the rally were defensive stocks like

General Motors

(GM) - Get Report

and

Procter & Gamble

(PG) - Get Report

. They contributed a total of more than 30 points.

Also,

Microsoft

(MSFT) - Get Report

was being a generous contributor, with 19 points to the Dow's positive. Thursday, Microsoft was the victim of a hack attack.

TheStreet.com

covered the

hacker break-in in a separate story.

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Market Internals

Breadth was positive on active volume.

New York Stock Exchange: 1,800 advancers, 1,026 decliners, 1.087 billion shares. 53 new 52-week highs, 56 new lows.

Nasdaq Stock Market: 2,061advancers, 1,838 decliners, 1.965 billion shares. 44 new highs, 134 new lows.

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Most Active Stocks

NYSE Most Actives

TheStreet Recommends

  • Nortel: 43.4 million shares.
  • AT&T (T) - Get Report: 37.1 million shares.
  • Corning: 19.7 million shares.

Nasdaq Most Actives

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Sector Watch

Oil stocks were feeling pressured again. The

American Stock Exchange Oil & Gas Index

was down 1.4%, while the

Philadelphia Stock Exchange Oil Service Index

fell 5%. This morning,

Goldman Sachs

cut oil service stock

Cooper Cameron's

(CAM)

2000 and 2001 earnings estimates. The stock plunged 9.6%.

The

Philadelphia Stock Exchange Semiconductor Index

sunk 2.9%. Component

Applied Materials

(AMAT) - Get Report

lost 4.4% to $30.25.

The GDP numbers put financials in a happy place. The

American Stock Exchange Broker/Dealer Index

was 2% higher.

Merrill Lynch

(MER)

and

Lehman Brothers

(LEH)

were two of the sector's strongest components. The

Philadelphia Stock Exchange/KBW Bank Index

lately rose 3%, and the

S&P Insurance Index

jumped 2%.

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Bonds/Economy

Bonds initially rallied after the GDP numbers were released, but then fell back.

The benchmark 10-year

Treasury note is at 100 5/32, down 9/32, to yield 5.728%.

The 30-year

Treasury bond is 4/32 lower to 107 6/32, yielding 5.742%.

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International

European markets finished strong following JDS' strong earnings release Thursday.

The

FTSE 100

in London was up 64.20 to 6366.50.

The

CAC 40

in Paris was 60.51 higher to 6268.93, while the

Xetra Dax

in Frankfurt was up 141.32 to 6909.22.

The

battered euro was climbing back after falling to new lows yesterday, lately at 108.62.

The major

Asian equity markets ended lower Friday, as technology shares closed out the week with a whimper.

In Tokyo, the

Nikkei 225

closed down 276.2 points, or 1.9%, at 14,582.2, as tech bellwether

Sony

(SNE) - Get Report

suffered heavy losses after posting disappointing earnings.

In Tokyo trading, the dollar traded up 0.13 to 108.37 yen. The greenback was lately at 0.839.

Elsewhere, Taiwan's

TWSE

index fell 136.7, or 2.3%, to 5805.2, as chip-making giant

Taiwan Semiconductor

(TSM) - Get Report

fell 3.3%. South Korea's

Kospi

index slid 8.3, or 1.6%, to 515.3.

Hong Kong's

Hang Seng

index dipped 93.8, or 0.6%, to 14,902.5, as

Pacific Century CyberWorks

(PCW)

fell 0.8% to HK$6.00 ($0.76) and

China Mobile

(CHL) - Get Report

rose HK$0.50, or 1%, to 52.75.

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