At Last, a Winning Streak for the Nasdaq
Despite warnings of a difficult year ahead from online media giant Yahoo! Inc. (YHOO ), the market shrugged off the bad news and went searching for tech bargains instead, lifting the Nasdaq to finish higher for the third consecutive day - a trend not seen since August of last year. Blue chips, meanwhile, which spent most of the session in the red, managed to end higher.
After the close of trading on Wednesday, Yahoo reported its fourth-quarter results were on target, but added the economic slowdown will mean disappointing revenues and earnings for 2001. Shares of Yahoo ended down 4-1/8 at 25-7/8.
But the big-name warning couldn't dampen overall demand for tech issues. "Of course, the rally is not guaranteed to last. But it has a more substantive feel to it than previous rallies," said Arnie Berman, an analyst at Wit SoundView.
Berman added tech stocks appear to be surviving challenges including warning signs earlier this week from network giant Cisco Systems Inc. (CSCO ) and mobile phone maker Nokia Corp. (NOK ). Tech stocks also are enduring a slew of investment rating downgrades from Wall Street, the analyst added.
Another test of tech investors' resilience could come on Friday. After the close of trading Thursday, tech bellwether Hewlett-Packard (HWP) (HWP ) issued a profit warning, citing weaker economic conditions.
Amaury de Barros Conti, a senior trader at U.S. Global Investors, also was cautiously optimistic about the market. "We are getting to the point where a lot of people are looking for some opportunities by looking at companies that should benefit over the next nine to 12 months out," de Barros Conti told Standard & Poor's research unit.
In addition to technology, chip and financial services stocks showed strength, while drug and cyclical stocks showed weakness.
Meanwhile, blue chips were under pressure for much of the session, amid worries about California's electricity crisis.
California is grappling with its worst storm in three years and two of its main utilities are nearly bankrupt. Subsequently, electric power officials on Thursday ordered four hours of rolling blackouts across the state to conserve shrinking energy supplies, Reuters reported. The blackouts were ordered by the California Independent System Operator, or ISO, as part of a "Stage Three Emergency" -- the highest-level power emergency -- and could affect about 2 million state residents. The ISO manages most of the transmission grid serving California's residents.
Also keeping the buying mood in check was uncertainty about how much the Federal Reserve would ease on interest rates at its regularly scheduled monetary policy meeting Jan. 31, according to Standard & Poor's research unit.
The research unit also noted that concerns about both profit and GDP growth this year would continue to dominate investor sentiment, and corporations seem eager to get the bad news out of the way and guide expectations lower while sentiment remains so bearish.
The tech-heavy Nasdaq Composite Index finished up 116.30 points, or 4.61%, at 2,640.48. The blue chip Dow Jones industrial average closed up 5.69 points, or 0.05%, at 10,609.96. The broader Standard & Poor's 500 Index ended higher by 13.58 points, or 1.03%, at 1,326.85.
Treasuries finished lower amid strength in equities. Earlier in the session, pit sources reported rumors of an emergency Fed meeting Thursday due to the California power crisis, according to Standard & Poor's research unit. A Fed spokesman offered the standard "no comment" to the rumors. The spokesman, however, did confirm there was a regularly scheduled board meeting Wednesday on merchant banking rules, and that no other regular meeting is scheduled for Thursday.
Stocks in the News
Motorola (MOT ) posted a fourth quarter earnings per share of $0.15 compared to $0.25 a year ago, as higher manufacturing costs and operating expenses offset an 11% sales rise. Results were in line with the company's lowered guidance. S&P maintains its avoid rating. Robertson Stephens downgraded its investment rating on CNET Networks (CNET ) to long term attractive from buy. Goldman Sachs removed CNET from its recommended list.
Japanese tire maker Bridgestone Corp. said its president and chief executive officer, Yoichiro Kaizaki, would resign, in an effort to salvage the company's image after a costly and controversial tire recall: Reuters.
Dean & DeLuca Inc., the high-end specialty food retailer, withdrew a $69 million initial public offering of common stock because of unfavorable market conditions: Reuters.
European markets ended higher. The London Financial Times-Stock Exchange 100 index finished up 55 points, or 0.91%, at 6,114.90. In Germany, the DAX Index closed up 139.88 points, or 2.21%, at 6,459.95. Meanwhile, France's CAC 40 ended up 49.43 points, or 0.87%, at 5,702.78.
In Asia, equity markets finished down. Japan's Nikkei 225 Index closed off 231.58 points, or 1.72%, at 13,201.07. Hong Kong's Hang Seng index finished off 345.02 points, or 2.24%, at 15,090.77.
Unisys Corp. (UIS ), Microsoft Corp. (MSFT ) and Dell Computer Corp. (DELL ) are teaming up to create new voting technology in the wake of the ballot-counting fiasco in the U.S. presidential election, Unisys said: Reuters.
By Heesun Wee