Wall Street spent another week fighting back from the Sept. 11 terrorist attacks, as investors took full advantage of any nugget of good news to send the major averages higher.
Reality tried and failed to get in the way.
Economic news and profit forecasts battled for supremacy in the hearts and minds of investors. The
Federal Reserve on Tuesday cut rates by another half-point -- the ninth time this year the
Federal Open Market Committee has lowered the fed funds target rate. Interest on overnight loans is now at 2.5%, the lowest level in 39 years. Two tech heavy-hitters also tried to jazz jaded investors, and for a couple of trading sessions, they succeeded. Enter the warnings. And the jobs report.
For the week, the
Dow Jones Industrial Average gained just over 3%, while the
Nasdaq rose 7.11% and the
S&P 500 added 2.85%. Stocks were broadly higher until Thursday afternoon, when the Dow briefly sputtered. Then, after spending much of Friday in the red, the averages finished the day higher when President Bush said he would push for more tax relief.
At midweek, the Nasdaq got soothing words from
ever-rosy CEO, John Chambers, and shot up 5.9% -- its biggest one-day gain since April. Chambers did nothing more than say the company
would meet analysts' first-quarter estimates. Next,
said it expects to match the consensus earnings and sales expectations for the third quarter.
Tech investors, hungry for anything sweet, were able to successfully ignore warnings from
, along with
projection of another multibillion-dollar
"The most important thing I noticed this week is that the stock market shrugged off preannouncements," said Peter Boockvar, market strategist at Miller Tabak. "The market has looked toward next year, knowing the economy is going to respond well to fiscal and monetary stimulus.
each warned this week," said Boockvar. "And the stocks are up. They've discounted the bad news."
Dell and Cisco tried to separate themselves from the pack of technology has-beens, but the rest of the hung-over partygoers weren't in a position to leave well enough alone. On Thursday,
lowered its quarterly guidance. Friday morning, both
Advanced Micro Devices
Expect more where that came from. Though hopeful investors, institutional and retail alike, are
aching for anything to help them regain some of the billions of market capitalization lost in the last year and a half, the third-quarter earnings season is still in its infancy.
By the time the market opened Friday, the well-documented troubles of the U.S. economy again were dominating the headlines. The Labor Department said the economy lost 199,000 jobs in September, more than economists were expecting. Still, the unemployment rate held steady at 4.9%. But the drop represented the biggest monthly loss of nonfarm jobs since September 1991. The monthly jobs report followed similarly bleak data on weekly jobless claims. Government numbers out Thursday showed that new claims for unemployment benefits rose 71,000 in the week ended Sept. 29 to 528,000, their highest level in nine years.
"The week built to a crescendo with relatively good news from Cisco and Dell," said Art Hogan, market analyst at Jefferies. "Friday, you had the reverse of it with bad news in the employment report and from Cisco. But the market hasn't given up its gains. So it's been a pretty good week."
Building on the trend will be the trick.
"The market has done yeoman's work in the sessions of the past week," said Tony Cecin, manager of Nasdaq trading at U.S. Bancorp Piper Jaffray. "It could be trying to tell us the worst is over."
What does Cecin think about valuations? "It's easier to believe in Sun Microsystems at $9 than at $40
where it traded less than a year ago," he said. "I think there's less risk in being long the market right now than in being short."