SAN FRANCISCO -- Like a pack of clothes hounds returning to a sale at Loehmann's, investors again flocked to perceived bargains created by the selling last month.
Undaunted by the almost certain prospect of a rate hike from the
tomorrow and more signs of
economic strength today, Wall Street continued the trend begun
yesterday afternoon, scrambling wildly to grab stocks -- tech and retailers, particularly -- as the day progressed.
Nasdaq Composite Index
closed just off its high of the day, up 111.63, or 2.8%, to 4051.98 as bellwethers such as
built on yesterday's advance while
also joined the party.
rose 7.2% after
making official a wireless network deal with China that had been widely discussed yesterday.
leapt 15% after the
antitrust investigation. The
Led by Qualcomm,
TheStreet.com New Tech 30
rose 15.36, or 2.6%, to 605.42. Unveiled Jan. 5, the TSC New Tech 30 is an expanded index designed to replace the
index: The market-cap-weighted index remains focused on tracking the most scorching part of the market, the magnet for Wall Street's hot money. A list of the new index components is available at
Following "some trepidation about the
Fed meeting tomorrow this morning, we stated to see some short-covering and real buying in tech stocks," said Randy Billhardt co-head of block trading at
, who noted that liquidity in individual stocks remains tight. "Stocks took off as people became more comfortable
techs are the stocks people want to be in long-term because they've led the market higher and will continue to."
Internet favorites were somewhat hesitant participants today after lagging yesterday. Still,
TheStreet.com Internet Sector
index rose 21.08, or 2%, to 1073.22 led by
. The online retailer -- which is expected to report quarterly results after the close tomorrow -- rose 4.5% after
Banc of America
upped its recommendation to buy from market perform.
Among blue-chip gauges, the
Dow Jones Industrial Average
rose 100.52, or 0.9%, to 11,041.05 after trading as high as 11,073.32 while the
gained 14.82, or 1.1%, to 1409.28.
In addition to Microsoft, the Dow was spurred higher by
, which rose 5.8%. GM announced strong January car and truck sales as well as plans to
lower its stake in
, which rose 1.8%.
also aided the Dow, amid a strong overall performance in the sector. The
S&P Retailing Index
Telecom stocks were also in play after
paved the way for the completion of its alliance with
by agreeing to swap wireless properties with
, which rose 6.4%. Bell Atlantic fell 3.8% while Vodafone gained 3.4%.
gained 7.52, or 1.5%, to 503.75, reflecting the market's positive breadth.
New York Stock Exchange
trading, 981 million shares were exchanged while advancers led declining stocks 1,680 to 1,318. In
Nasdaq Stock Market
action 1.422 billion shares traded while gainers led 2,326 to 1,825. New 52-week lows bested new highs 129 to 31 on the Big Board and by 102 to 87 in over-the-counter trading.
Rather than whether or not it will tighten, the only debate about the outcome of the Fed meeting -- which began today and concludes tomorrow -- is by how much the central bank will raise rates. With some market players fearing a 50-basis-point rate hike, the gains yesterday and today were fostered -- in part -- by others expecting a "relief rally" if the Fed hikes by "only" 25 basis points.
The question, then, is whether or not the market has already experienced the relief.
PaineWebber's Billhardt believes a tightening tomorrow and at the next meeting in March is "already priced into the market." Barring more economic data showing the economy "even stronger than what people anticipated," he foresees higher prices almost "regardless of what the Fed does."
The trader believes sector rotation will continue to be "significant and severe" but thinks the "overall market is still going higher" because it has been "so resilient" and the economy remains strong.
Conversely, Bruce Bittles, market strategist at
in Nashville, does not foresee a "big rally" forthcoming because "there's not enough fear in the market" and "this is the most widely heralded 25-basis-point tightening in history" and is already "built in" to major averages.
Bittles is concerned about the market's near-term outlook in part because it struggled during January despite better-than-expected earnings and "huge inflows" into mutual funds, the vast majority into aggressive growth funds.
"It looks like all the money is going in one area still," he said, eyeing today's action. "I was hoping the market would broaden, and we saw signs early in the year, but it's dried up. We're now back to very narrow leadership."
Also, there was "almost no supply of new issues" until the last week of the month, he noted. "That's about to change" and will "soak up some of the new money" coming into mutual funds.
Indeed, several new issues came to market today including
Quantam Effect Devices
, which each rose over 200% from their respective offering prices.
"I'm not saying the market is going down sharply, but it's in a high-risk zone with optimism at a high, interest rates going up and the Fed in an unfriendly posture," Bittles said. "It's a combination for problems down the road."
Among other indices, the
Dow Jones Transportation Average
rose 4.98, or 0.2%, to 2576.63; the
Dow Jones Utility Average
slid 2.19, or 0.7%, to 312.95; and the
American Stock Exchange Composite Index
gained 12.83, or 1.5%, to 873.08.
Back on the Scene
Sometimes, falling below the market's radar screen is the best thing that can happen to a stock. Blowing the doors off earnings estimates doesn't hurt, either.
, the online seller of airline tickets and hotel rooms, shot up a dot-com-like 20% on Tuesday, closing up 5 1/2 to end the day at 32 3/4.
Last night, the company announced a loss of 16 cents per share, versus a projected loss of 29 cents. The
affiliate also said it has agreed to acquire
But the reason that the company's earnings surprise was so surprising, one investor said, is because Expedia has barely registered a blip with investors since its IPO last November.
"Expedia has kind of languished as a stock. Since it came public, it's actually done awful," says Ken Smith, co-manager of the $5.9 billion
Munder Netnet fund, which counts the stock among its holdings. "I think people kind of forgot about it."
After being priced at $14 on Nov. 10, Expedia shot up 282% to close at 53 7/16. But it quickly began to fade after that and, on Monday, it closed 49% lower than it did on its first day of trading.
Smith says that plans by a consortium of major airlines to launch their own portal, which would allow them to sell tickets directly and bypass companies like Expedia, weighed down on the stock throughout the fourth quarter. And the raft of new IPOs that came to market during that time didn't help the stock, either.
"There were a lot of new stories out there. This one kind of got lost in the shuffle."
Market data above are preliminary. For coverage of today's top stocks in the news, see the Company Report, published separately