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Investors Buy Bargains Ahead of Earnings

April 10, 2001|From Reuters

Stocks eked out modest gains Monday as investors snapped up some beaten-down shares while treading gingerly ahead of this week's slew of earnings reports.

"People are doing a little bit of bargain hunting," said Paul Cherney, market analyst at S&P MarketsScope. "There's so much pent-up buying demand. There are so many people that just want to believe in anything."

The market got an early boost when Web retailing giant Amazon.com forecast a smaller-than-expected loss, giving investors an incentive to dip a toe back into stocks less than a week after the Nasdaq market slumped to two-year lows.

The tech-laden Nasdaq composite index rose 25.35 points, or 1.5%, to end at 1,745.71, buoyed by Internet and biotechnology stocks. But weakness in semiconductors capped the Nasdaq's gain after brokerage houses suggested the sector was headed for its worst slump in 16 years.

The blue-chip Dow Jones industrial average rose 54.06 points, or 0.6%, to 9,845.15. Its gains were limited, however, by weakness in high-tech shares such as chip maker Intel, which fell 43 cents to $23.20 after slumping to a 52-week low of $22.25, and computing giant IBM, down $1.95 at $96.

The broad Standard & Poor's 500 index added 9.16 points, or 0.8%, to 1,137.59.

Advancers led decliners by a margin of 9 to 5 on the New York Stock Exchange and by a 7-6 margin on Nasdaq. Volume was light on both markets.

The latest earnings reporting season heats up this week, and analysts are anticipating more bad news as the slowing U.S. economy grinds down corporate profits.

"We're getting into earnings, and I think that is causing investors to be nervous," said John Davidson, chief investment officer at Circle Trust Co. He said the volatility seen in recent sessions could continue. "These are uncertain times."

The market also appeared to be pausing for breath after a week of gut-wrenching volatility that saw stocks slump amid a slew of high-tech profit warnings and then soar when computer giant Dell Computer said it stood by its first-quarter profit forecasts. The Nasdaq jumped nearly 9% on Thursday after the Dell news to rack up its third-biggest percentage gain ever.

The market had an upbeat start to this holiday-shortened trading week as Amazon, citing strong growth in electronics, said its loss is expected to be less than $255 million and eyed revenue of more than $695 million. Analysts had expected revenue of $669.6 million. Amazon surged $2.81 to $11.18, and its shares racked up a rise of more than 40% at one point.

The U.S. stock market will be closed for the Good Friday holiday.

Yahoo, which reports its results Wednesday, added 83 cents to $15.64. The Amex Internet index was up about 3%, reflecting gains by the likes of EBay, up $2.48 to $37.98, and Check Point Software Technologies, which rose $4.82 to $52.07.

Money managers still are cautious, though.

"Investors really have very little conviction, and very little confidence that any of these rallies will hold, particularly in the face of a quiet Federal Reserve and a rather noisy earnings announcement period coming up," said Ned Riley, chief investment strategist at State Street Global Advisors in Boston.

Wall Street is rife with speculation over whether the Fed will lower interest rates ahead of its scheduled meeting May 15 in an effort to prop up the faltering U.S. economy. On Friday, an unexpected drop in U.S. payrolls in March helped heighten expectations the Fed would act early and aggressively.

The central bank has cut its key short-term interest rate by 1.5 percentage points this year, and Wall Street is widely betting it will lower rates an additional half-percentage point.

Market Roundup, C11-12

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