Wow, Two Days Without Cracking Up: Stocks Move Higher in Near-Unison

Broad strength was the theme on all major indices, but Wall Streeters continue to watch warily for a retest of recent lows.
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"Endeavor to persevere -- we thought about those words for a long time, endeavor to persevere."
-- Chief Dan George, The Outlaw Josey Wales

The market did the same, and the result was the first trading session in a while that didn't have investors digging their nails into their chairs. Biotechnology stocks reasserted themselves on the

Nasdaq Composite Index

, while the

Dow Jones Industrial Average

was strong from top to bottom, and all major indices finished convincingly higher.

Both the Comp and the Dow gave back a portion of their gains in the last hour of trading, owing to continued skittishness among investors after

Tuesday's uncomfortable session, which still has the market feeling washed out. At one point, the Dow was up 168 points, but it finished up 80.35, or 0.7%, to 11,114.27, led by

Hewlett-Packard

(HWP)

, which rose 4.3%.

The Nasdaq, at one point up 155, finished up 98.35, or 2.4%, to 4267.57. The

S&P 500

gained 13.94, or 0.9%, to 1501.31. The

Russell 2000

rallied 14.47, or 2.8%, to 532.51.

"We're tired," said Brian Piskorowski, market analyst at

Prudential Securities

. "We're seeing 'book 'em, Dano' profit-taking. Once we couldn't get going around 1 p.m., we just rolled over. Ultimately, what you're seeing is profit-taking in what's been a sketchy week."

The trading today -- an attempt at a big rally that ultimately tails off -- is typical of the period that follows a major shakeup in confidence. Investors are trying to screw up the courage to put money to work, but once bitten, twice shy, and so they take money off the table as soon as the dog barks.

What's helping restore investor's mettle at all, after weeks of volatility that culminated in Tuesday's freak-out, is

earnings. By all accounts, this should be a strong few weeks of reports. Negative preannouncements have been much fewer than usual, and analysts have been generally revising estimates higher.

But the action in

Yahoo!

(YHOO)

today demonstrates that the power, if anywhere, is with those who are looking to sell the stock. Yahoo! beat analyst expectations by 1 cent, reporting first-quarter earnings of 10 cents a share postclose yesterday, but since it missed the so-called whisper number, the stock was hammered in premarket activity and during the regular session, dropping it 6.8%.

Had this been a bit of "buy the rumor, sell the news" activity, it would have been shrugged off as investors anticipating the report. But like many other Internet stocks, Yahoo! has been beaten up since the end of last year, when it peaked at 237 1/2.

"I think you don't get a 6.8% decline in a day unless people aren't anxious to be buying the stock," said Paul Cherney, market analyst at

S&P MarketScope

. "The selloff we had wasn't fostered mostly by aggressive sellers -- it was mostly fostered by people thinking

stocks had to go lower to create values."

Net Stocks Gain Strongly

Despite Yahoo!, Internet stocks as a whole held up well today.

TheStreet.com Internet Sector

index gained 43.45 to 1015.43, a 4.5% rise. Bellwethers such as

Amazon.com

(AMZN) - Get Report

rose 2.5%, while

RealNetworks

(RNWK) - Get Report

rose 2%, the first real show of strength in these stocks in a long time.

Shares of

Jupiter Communications

(JPTR)

soared, gaining 41.7%, after the company said it expects first-quarter revenue to rise 175%.

Semiconductors were strong all day, led by the likes of

Applied Materials

(AMAT) - Get Report

, which gained 2.6%. The

Philadelphia Stock Exchange Semiconductor Index

jumped 1.9%.

Meanwhile, biotechnology stocks, which pulled an

Edward VIII, abdicating leadership on the Nasdaq in the early days of March, reasserted themselves today. The catalyst was

New York Stock Exchange

name

Celera Genomics

(CRA)

, which announced it had successfully mapped the entire human genome -- the sequence of a person's genes. That stock rose 18.7%, and others followed.

The

American Stock Exchange Biotechnology Index

gained 7.4%, while the

Nasdaq Biotechnology Index

gained 4.9%.

Protein Design Labs

(PDLI) - Get Report

, a favorite among momentum players, exploded up 49.6%, while

Human Genome Sciences

(HGSI)

gained 3.7%.

The action in some of the biotechs and the stocks that make up

TheStreet.com New Tech 30

shows that the "buy the dip" mentality hasn't been shaken. TheStreet.com New Tech 30 gained 5.4% today.

But there's still a sense that most are approaching all sectors gingerly, and are wary to take long-term risk (long-term meaning, more than one day in a row) -- especially when the March

employment report

is due out tomorrow.

Looking for a Retest

Many technicians are still expecting the Nasdaq to retest the lows -- that is, drop to the 3650-3700 level again -- before heading higher. Equity funds that invest primarily in U.S. stocks had outflows of $2 billion in the five-day period ended yesterday, compared with inflows of $5.2 billion during the prior period, according to

TrimTabs.com

.

"By far and wide, I haven't seen anybody talking 'up, up, and away,' but bull markets don't end on a random day in April," said Piskorowski. "When we see a true reversal is when prices run painfully lower. There's conviction

to rally, but not long-staying conviction."

The expectation tomorrow is 376,000 new jobs on

nonfarm payrolls

for March. The market is going to be looking most closely at

average hourly earnings

, expected to rise 0.3%, although some think it could rise 0.4%. Rising wage pressures, a sign of inflation, are bad for the market, because they mean there's potential for more interest-rate hikes from the

Federal Reserve

. Most economists believe the Fed will hike interest rates at least one more time as a pre-emptive action against inflation.

Alcoa Shines

Dow component

Alcoa

(AA) - Get Report

reported strong earnings today, and the stock was rewarded, gaining 1 3/4 to 70 15/16.

The NYSE's most active was

Compaq

(CPQ)

, which gained 1 1/2 to 29 3/8 on 27.7 million shares.

On the Big Board, the weakest names were the drug stocks. The

American Stock Exchange Pharmaceutical Index

was down 2.4%, led by a 5.5% drop in

Schering-Plough

(SGP)

and a washout by

SmithKline Beecham

(SBH) - Get Report

, which fell 5%. The Dow's drug components,

Johnson & Johnson

(JNJ) - Get Report

and

Merck

(MRK) - Get Report

accounted for 22 points of negative drag on the industrials.

Broker/dealers were stronger, despite Dow component

American Express

(AXP) - Get Report

, which lost 2.4% today.

Charles Schwab

(SCH)

gained 8.5% and

Goldman Sachs

(GS) - Get Report

rose 8.8%.

The

Dow Jones Transportation Average

finished the day up 23.04 to 2847.32. The

Dow Jones Utilities Average

ended lower, down 2.21 to 292.65.

The benchmark 10-year Treasury note was off 16/32 to 104 5/32, yielding 5.936%, ahead of tomorrow's employment report.

Market Internals

Breadth was positive on strong volume.

New York Stock Exchange

: 1,862 advancers, 1,135 decliners, 1 billion shares. 43 new highs, 29 new lows.

Nasdaq Stock Market

: 2,787 advancers, 1,431 decliners, 1.7 billion shares. 40 new highs, 57 new lows.

For a look at stocks in the news, see the Company Report, published separately.