Consumer Data, Tech Stocks Help Lift Market
Bargain hunting in the technology sector lifted the stock market moderately higher Friday, despite a mixed forecast from Nortel Networks and more weak economic data.
Analysts said less-than-dismal reports on consumer spending and sentiment gave investors hope that the worst was over for the U.S. economy, and a turnaround would begin in early 2002.
“Wall Street can’t wait for people to grab it by the lapels and say, ‘Buy now,’” said Larry Wachtel, market analyst at Prudential Securities. “People are betting a recovery will come quicker than we’ve thought.”
The Dow Jones industrial average finished up 50.16 points, or 0.5%, at 10,035.34. Broader stock indicators also advanced. The Standard & Poor’s 500 index gained 4.96 points, or 0.4%, to 1,144.89, while the technology-focused Nasdaq composite index rose 27.29 points, or 1.4%, to 1,945.83.
The indexes ended the week mixed. The Dow gained 2.2%, the Nasdaq fell 0.4% and the S&P; rose 1.9%.
The Commerce Department reported Friday that consumers reduced their spending in November by 0.7%, a weak but slightly better-than-expected performance. Incomes fell for the third straight month as the nation’s jobless rate climbed to a six-year high.
Still, after a week of earnings and revenue warnings and tech sell-offs, the market welcomed the news. Wall Street also was pleased with news that the University of Michigan consumer sentiment index rose to a four-month high in December, another indicator of strength.
“People are interpreting this economic data as meaning that the economy and business are bouncing along the bottom,” said Christopher Wolfe, equity market strategist for J.P. Morgan Private Bank. “So people are looking at higher-risk stocks again.”
In trading Friday, investors flocked to shares of tech companies--including Juniper Networks--that they had spurned earlier this week. Juniper rose $1.16 to $20.01, rebounding from losses triggered by an earnings warning Thursday and general profit-taking. Western Digital, a Lake Forest-based maker of computer disk drives, rose 58 cents to $6.10 after raising sales and profit forecasts for its fiscal second quarter, which ends Dec. 28.
Nortel rose 77 cents to $7.13, after lowering its fourth-quarter revenue estimates but saying its loss would be narrower than expected.
Wall Street was less forgiving of financial shares. J.P. Morgan Chase dropped 77 cents to $35.75 on continuing worries about its $2.6-billion exposure stemming from the collapse of Enron. The figure is more than double what it previously disclosed--including nearly $1 billion it says it is owed by insurance companies.
Also Friday, the Commerce Department said U.S. gross domestic product shrunk at an annual rate of 1.3% in the third quarter, a bigger drop than the 1.1% the government previously estimated. Although GDP is considered the broadest measure of the economy’s health, these figures got a muted reception because the third quarter ended months ago--and Wall Street had already written it off.
Advancing issues led decliners by more than 3 to 2 on Nasdaq and the New York Stock Exchange. Volume was heavy because of Friday’s triple-witching session--the quarterly expiration of index futures and index and stock options. Historically, triple witching weeks are volatile as fund managers sell and buy stocks to adjust their portfolios.
*
Market Roundup: C4
