Posted at 12:30 p.m., Thursday, August 16, 2001
Bargain hunters buoy stocks
• Hawai'i Stocks
• Updated Market Chart
Associated Press
NEW YORK — Last-minute bargain hunters boosted the stock market today, turning around losses triggered by a profit and revenue warning from Ciena and concerns about earnings at Dell Computer and Hewlett-Packard.
Wall Street's gains came at the end of a session marked by sharp losses — volatility analysts attributed to a conflict between investors' fears about the uncertain economy and their desire to snatch up stocks at cheaper prices.
"On a near-term basis the market is oversold," said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray. "But when you think about all the weakness out there ... what's the impetus to rush out and buy?"
The Dow Jones industrial average rose 46.57 to 10,392.52, according to preliminary calculations. The Dow fell as much as 74 points in today's trading.
The market's broader indicators followed the same, rocky path as the Dow. The Nasdaq composite index finished up 11.40 at 1,930.29, after closing yesterday at its lowest level since April and reversing a 39 point loss earlier in the day.
The Standard & Poor's 500 index, Wall Street's broadest measure, rose 3.63 to 1,181.65 after falling nearly 12 points earlier.
Given the choppy trading and the fact that most companies are unable to say that business is improving, analysts are doubtful any gains will be long-lived.
"There is a hesitancy to buy here. Investors are waiting for signs that the economy is indeed on the mend, so that companies, whether they are in the old industry or new industry, can show real earnings growth," said Joseph V. Battipaglia, chief investment strategist at Gruntal & Co.
"The first thing you are going to have to hear is that there is some growth ahead for industries and companies ... after what amounts to six quarters of going down," he added. "That is the necessary catalyst to firm up investors demand for equities."
The market's vulnerability was attributable to Ciena, which plummeted $8.50, or 30 percent, to $19.62 after sharply reducing revenue and earnings estimates for its fiscal fourth quarter and 2002. The communications equipment maker's third-quarter profits beat expectations by a penny a share.
Other network equipment manufacturers fell on Ciena's news, including Tellabs, which declined 73 cents at $14.45.
Also weak were companies slated to release earnings later, signaling that investors don't expect the battered sector to recover in the near term. Dell slipped 12 cents to $25.38, while Hewlett-Packard, a Dow industrial, eked out a gain of 3 cents to $24.13.
After the market closed, H-P released earnings that beat lowered expectations by a penny, while Dell met expectations.
Meanwhile, some tech stocks flourished, with Microsoft rising $1.42 to $64.62, and IBM up 74 cents at $105.75.
The stock market was down most of the day, despite three positive reports on the economy. First, consumer prices dropped 0.3 percent in July, the biggest decline in 15 years. The decline in the Consumer Price Index was attributed to a sharp drop in the cost of gasoline and other energy products, according to the Labor Department.
Additionally, the Commerce Department reported that housing construction rose by 2.8 percent in July to an annual rate of 1.67 million, the best showing in 17 months.
Also, the number of workers filing new claims for state unemployment insurance fell by a seasonally adjusted 8,000 to 380,000 last week, suggesting that the flurry of layoffs seen recently may be moderating. The more stable four-week moving average of claims fell to 370,750, its lowest point since early March.
