IN BRIEF / RETAILING
Wall Street staggered through another unsettling trading session Thursday, as stocks slumped early in the day only to stage a late recovery and end in positive territory.
Investors for much of the day shrugged off reports that U.S. inflation was tame and the housing market strong. The inflation numbers appear to leave the door open for more interest rate cuts by the Federal Reserve, but many investors remain concerned about the economy’s weakness and sliding corporate profits. The Fed meets Tuesday.
Matters weren’t helped by a dismal profit forecast from communications-gear maker Ciena. And after the market closed, Dell Computer and Hewlett-Packard reported sharply lower quarterly results.
“The big thing that will move the market is corporate earnings, and we really have not had a rosy earnings picture,” said Richard Babson, president of the Babson-United Investment Advisors.
The Nasdaq composite index rose 11.43 points, or 0.6%, to 1,930.32 after sinking as much as 2% and falling below the 1,900 mark. The technology-loaded index is trading around its lowest levels since mid-April.
The blue-chip Dow Jones industrial average was up 46.57 points, or 0.5%, at 10,392.52 after falling as much as 0.7%. The broader Standard & Poor’s 500 index finished up 3.64 points, or 0.3%, at 1,181.66.
Institutional investors pushed up the market late in the session to take advantage of price discrepancies between option contracts and underlying stocks ahead of today’s “double witching”--when certain stock-option and index-option contracts expire.
“A number of institutions have arbitrage positions and they are rolling over their options in the few days ahead of expiration,” said Ricky Harrington, a technical analyst at Wachovia Securities. “It’s more of a technical condition of the market and it has very little to do with the direction of the market in the next few days.”
Advancing stocks beat out decliners on the New York Stock Exchange by 8 to 7. The two sides were about even on Nasdaq. Trading volume was moderate.
Ciena, the most active issue on Nasdaq, ended down more than 30% in a massive sell-off after cutting its 2001 and 2002 financial forecasts. Ciena fell $8.50 to $19.62. Rival ONI Systems dropped $1.56 to $17.02. JDS Uniphase fell 14 cents to $8.18.
Some tech heavyweights managed to make a comeback despite the uncertainty over corporate profits. IBM gained 74 cents to $105.75 after floundering in negative territory for much of the session. Web-gear giant Cisco Systems also reversed an early loss to finish up 48 cents at $17.48.
The consumer price index, a key gauge of retail-level inflation, fell 0.3% in July after rising 0.2% in June. Economists had expected it to come in unchanged. Excluding volatile energy and food prices, the index rose 0.2%.
Stock investors largely looked past a report that July housing starts rose 2.8%. In a more negative report, the Federal Reserve Bank of Philadelphia said its regional business conditions index slid sharply to -23.5 in August from -12.2 in July. Though a number below zero indicates economic contraction, the index remains well above a decade low of -36.8 in January. Consensus forecasts were for a rise to -9.5.
The Fed report and the benign inflation report heartened bond investors, however. U.S. Treasury prices jumped, and yields fell, on renewed hopes for another Fed rate cut beyond next week’s expected ease in rates.
The yield on the benchmark 10-year Treasury note slid to 4.94% from Wednesday’s close of 5%.
The weakening dollar, which makes U.S. exports cheaper, appears to be helping shares of companies that do a lot of business overseas. Consumer-products giant Procter & Gamble rose $2.01 to $74.19, while drug maker Merck rose $1.09 to $69.99. Both are members of the Dow industrials.
The dollar eased slightly against key currencies Thursday after tumbling sharply in recent weeks.
Market Roundup, C6-C7
