Posted at 11:35 a.m., Tuesday, April 17, 2001
Stocks recover on good economic news
Associated Press
NEW YORK — Stocks advanced modestly today, overcoming a choppy session in an encouraging sign of stability following an earnings warning by Cisco Systems.
Market watchers remained cautious, however, noting more profit reports are ahead — including results from Intel,expected after the markets closed.
"It's good news the market was able to recover, but we still have a lot of earnings reports to get through," said Charles Reinhard, senior U.S. investment strategist at Lehman Brothers. "By the end of this week, half of the companies of the Dow will have reported earnings and investors will have a better idea of what is ahead."
The Dow Jones industrial average closed up 58.30 at 10,216.86, according to preliminary calculations, after spending much of the session down. The advance was powered by a late-session surge as investors apparently gained confidence about the market's prospects.
Broader indexes also were higher. The Standard & Poor's 500 index advanced 12.11 at 1,191.79, and the Nasdaq composite index gained 13.47 to 1,923.04.
Stocks fell after the opening but recovered as investors digested news from the Federal Reserve, which reported that industrial production at the nation's factories rose a solid 0.4 percent in March, exceeding many analysts' expectations. That marked the first rise since September.
Analysts said the muted dropoff and the quick rebound show investors have made their peace with earnings warnings and built those expectations into stock prices.
"It shows that the market is growing more insensitive to bad news and that says the market has discounted the worst news and is now looking to better times down the road," said Scott Marcouiller, vice president of market analysis at A.G. Edwards & Sons in St. Louis.
The relative steadiness of the market today could signal that stocks have more or less reached bottom, analysts said.
"To convert that into a rally takes a lot of buying pressure, a lot of volume on the upside. We haven't quite gotten to that point yet, but you've got to crawl before you can run," said Charles H. Blood Jr., director of financial markets strategy at Brown Brothers Harriman & Co. in New York.
Cisco, which fell sharply after trading began, made up some of that loss and was down 55 cents at $16.65.
The company said late yesterday it expects earnings per share to be in the "very low, single-digit range." Analysts surveyed by Thomson Financial/First Call were expecting 8 cents per share.
Many analysts had expected sizeable losses in response to Cisco's news.
Advancing issues slightly outnumbered decliners 17 to 12 on the New York Stock Exchange.
The Russell 2000 index rose 4.69 to 455.59.
Overseas, Japan's Nikkei stock average fell 1.4 percent. European stocks also suffered. Germany's DAX index slid 1.1 percent, Britain's FT-SE 100 fell nearly 0.1 percent, and France's CAC-40 dropped 0.6 percent.
