SAN FRANCISCO -- "If it's not one thing, it's another. There's always something," was
Roseanne Roseannadanna's payoff line. Today, it was as if the late Gilda Radner's classic character was cloned, because there was a whole lotta "somethings" influencing stocks, mostly with favorable implications.
The list included more fallout from yesterday's
Fed decision, the
U.S. Court of Appeals
overturninga ruling to break up
, plus better-than-expected earnings from
. Oh, and don't forget the coming end of the quarter and rebalancing of the
Dow Jones Industrial Average
each gained 1.3%, while the
climbed 2.4%, and the
rose 1.5%. Advancing stocks bested declining issues by 3 to 2 in
trading, where upside volume bested down by 2 to 1. In over-the-counter trading, gainers led 23 to 13 and upside volume squashed down volume by 5 to 1.
The upbeat mood was lost on the bond market, however, where prices fell across the yield curve. The short end of the curve got hit by growing expectations the Fed's rate-cutting cycle is nearing its end. Such sentiments were increased by minutes from the
May 15 meeting, which showed dissension among members regarding the size of the rate cut. That suggests future easing may be increasingly contentious.
The long end of the Treasury curve got hit by a sense the economy is going to rebound, a view enhanced today as jobless claims fell for the third-straight week. Anticipation of a stronger economy also may be compelling some investors to shift assets out of bonds and into equities.
For equities, the only real "downer" of the session was that major averages failed to sustain early highs, declining in the final hour after Microsoft's extended trading halt was lifted. Microsoft itself closed up 2% to $72.74 after trading as high as $76.15. Additionally, Nasdaq's trading systems were temporarily overwhelmed by the massive volume of activity in Microsoft after the stock was reopened. Despite an approximately three-hour halt, Microsoft was the third most actively traded over-the-counter stock today, at 63.7 million shares.
"As soon as they opened Microsoft, the system went down," said Anthony Cecin, manager of Nasdaq trading at
U.S. Bancorp Piper Jaffray
in Minneapolis. "Obviously, there was a technical glitch of some sort."
The trading snafus were just one of several "extraneous events" affecting stocks today, Cecin said. To the issues mentioned above, he added that next week is a "weird week" because the Fourth of July holiday falls on a Wednesday.
"Don't make any bets on how the market acts today or tomorrow or next week," the trader said. "I wouldn't read anything into
today other than it's a nice up day and it's nice to see most tech groups up." Indeed, most sectors within technology outperformed the Comp itself, with the closely watched
up 3% and the
Philadelphia Stock Exchange Semiconductor Index
Like many, Cecin questioned the sustainability of the Comp's recent advance -- it's up 4.6% this week -- and suggested a steady rise isn't likely until after third-quarter earnings are released and "the fuller impact of the euro's" weakness is known. The euro's downturn vs. the dollar has hurt earnings of many U.S. multinationals, both in terms of currency translations and weaker demand for U.S. exports.
Additionally, many market participants are now "writing off" 2001 and "starting to make bets on 2002," he noted. Market participants traditionally start to look ahead to the next year as the second quarter comes to a close. It's just they may be more anxious to do so this year, given the ongoing struggles of both the stock market and the economy so far in 2001.
The fact many of those bets are being made on tech stocks -- which continue to rally on the slightest hint of good news -- suggests to skeptics that the excesses of the late 1990s have yet to be fully wrung out. Despite hopes for a Fed-induced rebound, the fundamentals for many tech sectors remain
horrid, meaning valuations for the group are still unjustifiable, the bearish thinkers say. It probably won't be time to get long-term bullish on tech stocks until investors are sick of hearing about them, which isn't the case, judging by market action and emails.
However, tech optimists cite contrary indicators such as recent reports of selling by fund giant
and the relatively low tech weighting in
uncommon values released today. (Still,
got a boost from its inclusion in the list.)
Another reason for hope is that "over the past couple of weeks the market has had one horrible piece of news after another lobbed at and didn't crack wide open," observed Scott Bleier, chief investment strategist at
. The news about Microsoft today "might be the beginning of the end of the horridness."
Bleier is "more optimistic
now than at this time last quarter," adding that major averages might now proceed toward the higher end of their respective trading ranges. He put the Dow's range at 10,200 to 11,200, the S&P's from 1150 to 1350 and the Comp's from 1950 to 2450.
That said, the strategist forecast major averages have "no reason to break out" of those trading ranges anytime soon. Additionally, he foresees better days ahead for "dull and boring" companies with good balance sheets and high dividend yields such as
vs. stocks that "swing in 50% ranges."
being a "prototypical example" of the latter, he said. QLogic rose 11% today and is now up 35% since June 19 on no obvious news development.
The stock's wild swings suggest it can't be reasonably valued and "nobody knows what it's worth," Bleier said. "Let the hot money trade it up and down" and focus on more stable issues, even if they lack sex appeal.
But as recent action indicates, it remains hard for some investors to resist the allure of tech's siren call.
Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to
Aaron L. Task.