SAN FRANCISCO -- Displaying more Teflon than Ronald Reagan's
presidency , the stock market shook off not only Lucent's ( LU) profit warning Thursday night but a stronger-than-expected employment report as well. The expansive gains left most market players aghast.
"I went home last night thinking today would be one of the worst down days we've had in years," said Timothy Heekin, director of equity trading at Thomas Weisel Partners in San Francisco, an outlook shared by many. "A lot of people got the fake out." The Dow Jones Industrial Average continued its impressive comeback from
Tuesday's selloff, rising 269.30, or 2.4%, to 11,522.56, an all-time high. The Dow got its biggest boost from Procter & Gamble ( PG), General Electric ( GE) and Merck ( MRK). Meanwhile, the Nasdaq Composite Index, which had fallen nearly 10% in the prior three days, gained 155.49, or 4.2%, to 3882.62, its best-ever point increase. The S&P 500 rose 38.02, or 2.7%, to 1441.47. Overcoming early declines, the price of the 30-year Treasury bond rose 8/32 to 94 15/32, its yield falling to 6.54%. The gains came although nonfarm payrolls rose by 315,000 in December while average hourly earnings rose 0.4%, both in excess of expectations. The unemployment rate was unchanged at 4.1%, as expected. The employment report did not dispel the notion the Federal Reserve will raise interest rates next month. However, it did not fuel concerns the rate hike will be 50 basis points. The Dow Jones Utility Average continued its recent surge, rising 5.14, or 1.8%, to 297.78. The performance of the "utes" suggest the Fed will raise rates 25 basis points in February and 25 basis points at its March meeting "but that's it" for the next six months, according to one market watcher. "The market is starting to realize this." In addition to the bond market's ability to successfully "digest" the employment number, the key today was a sense "this Lucent situation is Lucent specific," Heekin said who also noted . portfolio managers were "licking their chops" at the prospect of a big decline this morning. "They didn't get it and had to come in and buy 'em at these higher levels." Overnight gains by Ericsson ( ERICY) and Nokia ( NOK) -- which continued in U.S. trading -- were prime indicators that Lucent's problems would be self-contained, the trader said. Other telecom names such as Nortel ( NT), up 26.4%, actually The market: Join the discussion on TSC Message Boards . benefited from Lucent's woes rather than being dragged down by them. Elsewhere, Cisco ( CSCO) rose 5.8% and Ciena ( CIEN) leapt 25.7%. Even Lucent stabilized after last night's harsh after-hours decline, rising 3.6% with over 136 million shares traded, the busiest session for a single stock in New York Stock Exchange history. Further reflecting that the far-reaching implications of Lucent's admission were unique to Lucent, optical telecom equipment makers enjoyed stellar gains, including JDS Uniphase ( JDSU), up 20.1%. JDS Uniphase helped TheStreet.com New Tech 30 rise 49.79, or 9.1%, to 595.13. Unveiled Wednesday, the TSC New Tech 30 is an expanded index designed to replace the Red Hots 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 ( http://www.thestreet.com/newtech/) here . Additionally, TheStreet.com Internet Sector index rose 58.49, or 5.7%, to 1084.89 behind strength in Net favorites such as Yahoo! ( YHOO) and CMGI ( CMGI). The Russell 2000 rose 12.97, or 2.7%, to 488.31 as market internals were solidly positive. In NYSE trading, 1.225 billion shares were exchanged while advancers dominated declining stocks 2,259 to 854. In Nasdaq Stock Market action, 1.628 billion shares traded while gainers led 2,595 to 1,577. New 52-week high bested new lows 68 to 41 on the Big Board and by 148 to 72 in over-the-counter trading.