Investors sent the Nasdaq soaring yesterday, helping the tech-heavy index post its first three-day winning streak since Labor Day.
The Nasdaq rose 116.39, or 4.6 percent, to 2,640.57, led by bellwether techs like Cisco Systems Inc., up $2.87 to $39.13; Sun Microsystems Inc., up $2.78 to $31.94, and Microsoft Corp., up $2.12 to $55.
The S&P 500 Index posted a respectable 1 percent gain, closing 13.55 higher at 1,326.82. Jack Welch’s General Electric, up $1.87 to $46.56, is credited with boosting the S&P after the company said it will resume a stock-repurchase plan. GE’s pending merger partner, Honeywell International closed at $47.38, a gain of $2.18. The Dow Jones industrial average was slightly higher, rising 5.28 to 10,609.55.
“It’s a positive sign that the market has been good three days running,” said Jim Grefenstette, senior portfolio manager, Federated Growth Strategies Fund. “The markets have started the day weak and rallied to finish strong, which means investors have cash to put to work.”
“We’re in a transition phase,” said Richard Hoey, chief economist and investment strategist, Dreyfus Corp. “The turbulence has a lot of people off-balance, and they’re still trying to figure it out.” Still, he added, the market’s activity “is characteristic of a period of the Fed easing and a week of corporate disappointment.”
However, not all believe this rally will continue – or that it’s a good thing. “We have a love affair with tech stocks, and it is not related to anything sustainable,” said Michael Weiner, managing director and portfolio manager at Banc One. “Stocks that are up 20 to 30 percent are up too much. I’m puzzled by [yesterday].”
He admitted that even a week after the Federal Reserve’s move to cut the prime rate by ½ point, he’s not sure what it means. “You’ve got to be bullish after a Fed cut, but we don’t see what the Fed was concerned with.”
Earnings warnings continued. Hewlett-Packard, after the market’s close, said its fiscal first-quarter earnings will fall short of forecasts. HP closed up $3.62 to $32.38 but fell after-hours.
And Yahoo! fell 13 percent after the company issued a weak earnings report Wednesday.
DoubleClick, which posted a loss, rose $1.50 to $12.75in after-hours trading. Earlier it closed down $1.18 at $11.25.
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Holiday!
The Nasdaq yesterday rose 116.39, or 4.6 percent, to 2,640.57, marking its first three-day winning streak since Labor Day. It wasn’t all fun in the January sun, though.
A recap:
* Cisco, Sun Microsystems and Microsoft led the charge, as investors bet rate cuts would boost tech profits.
* But a profit warning from Hewlett-Packard and disappointing earnings from Gateway erased gains in after-hours trading.
* Yahoo! fell 15 percent after trimming forecast earnings.