Technology stocks rally, muzzle bears
NEW YORK Investors are starting to party like it's 1999 again even though the bear is still stalking Wall Street.
Traders on the Chicago Board Options Exchange were busy taking buy orders in a rally led by tech shares.
"The worst is over," said Peter Cardillo, strategist with Westfalia Investments. "This is a bottoming process." He said that retail sector news due Friday will be critical in setting the market's near-term direction.
Despite investors' newfound bravery, skeptics aren't convinced that yesterday's surge is a sign of better things to come.
"We've had rallies along the way, only to roll over and go lower," said Mark Minervini, president of Quantech Research.
For a day at least, the bulls controlled Wall Street again.
The Nasdaq composite soared 106 points, or 6.1 percent, to 1852.03. The Nasdaq is still down 25 percent this year and 63.3 percent from its March 2000 high. The Dow, down 6.3 percent in 2001, jumped 247 points, or 2.5 percent, to 10,103. And the Standard & Poor's 500 index gained 30.79 points, or 2.7 percent, to 1168.38 powered by double-digit percentage gains in the computer peripherals and communications equipment stocks.
But bears say they won't trust rallies like yesterday's until they see:
Talk of a better future. A bellwether stock like Cisco Systems or Intel must not only report better-than-expected earnings but also tell analysts that it has a clear picture of its future earnings stream, said Jeff Van Harte, portfolio manager for Transamerica Premier funds
New leadership. Right now, mainly defensive sectors such as energy and utilities are pacing the market. "The market needs fresh leadership from growth stocks" like techs for a meaningful bull run to occur, said Minervini.