Stocks finished near their highest levels for the day, in a session devoid of leadership but replete with twists and turns.
Nasdaq Composite Index, which rallied in the final hour of trading, finished up 38.6 points to 2031.2, though it fell below the flatline two times today. The
Dow Jones Industrial Average ended up 50.7 points to 10,647.33, though it landed in negative territory on four separate occasions. The
S&P 500 closed ahead 10.6 points to 1223.4.
Since the market showed a lack of direction today, traders put little stock in late-afternoon gains. "I just don't think there is any real trend for investors to hang their hat on," said Tony Cecin, manager of Nasdaq trading at
U.S. Piper Bancorp Jaffrey
. "They're waiting for second-quarter earnings to play out, in order to decide whether or not '01 will be a throwaway year."
Back in April, investors began betting on a recovery in the second half of this year. Since then, Wall Street has been searching for concrete signs of an earnings revival, amid second-quarter preannouncement season. But so far, news from corporate America has done little to convince investors the worst is over.
The market was able to shake off two profit warnings, released after the closing bell yesterday. Communications equipment maker
said it expects earnings to
fall dramatically short of second-quarter expectations, while German chipmaker
said it could post a loss for its fiscal year.
But the news continued to deflate optimism about
earnings report, released after the close on Monday. The software giant raised hopes about corporate earnings, saying the worst for its business could be over. But a reflex rally on the news yesterday fizzled, as investors began to worry that Oracle's optimistic outlook is isolated.
Today, Tellabs fell 24.3% to $16.04, while Infineon dropped 4.5% to $25.40. Some bellwether tech stocks, however, posted solid gains:
gained 8.8% to $31.06 and
advanced 3.1% to $27.49, despite a reduction in its earnings estimates at
Some experts feel that current price levels are looking more attractive. "The market is a bit oversold," said Bob Basel, director of listed trading at
Salomon Smith Barney
. (After two weeks of profit warnings, the market has racked up significant losses: Since June 4, the Dow is off 3.7%, the Nasdaq is behind 5.8% and the S&P 500 is off 3.5%.) "I think people are at a point where they are looking to the Fed."
Federal Reserve will meet on June 26 and 27 to decide monetary policy. The central bank is widely expected to cut short-term interest rates again, but it is still uncertain whether it will cut by 25 basis points or 50 basis points. Investors did not get much of a clue from Fed chief
Alan Greenspan's two speeches today, one before the
Senate Banking Committee
and the other before the
Since the beginning of the year, the central bank has reduced rates five times, bringing them down 250 basis points.
Fed fund futures, a proxy for monetary policy, are pricing in a 100% chance of a 25 basis-point cut and 48% odds of a 50 basis-point cut. Ahead of next week's meeting, financial stocks rose today. The
American Stock Exchange Broker/Dealer Index
closed up 9.3%.
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European markets finished mixed. The
rose 19.2 to 5699.6, while the Paris
fell 28.9 to 5170.5, and Frankfurt's
slipped 46.5 points to 5876.4.
The euro was lately trading lower at $0.8508. The greenback was higher to 123.54 yen.
Asian markets closed mixed overnight. Tokyo's
broke a three-day losing streak to close up by 100.38, or 0.8%, to 12,674.64. But Japanese bank stocks remained weak amid concerns about loan quality. Hong Kong's
fell 214.95, or 1.64%, to 12,918.71.
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