Nasdaq, Dow Rise in Advance of Fed Meeting
Stocks were higher overall Monday in moderate trading, as Wall Street approached the start of the Federal Reserve’s two-day meeting with cautious confidence.
The Nasdaq composite rose 57.04 points, or 2.1%, to 2,838.34, closing near its high for the session.
The Dow industrials added 42.21 points, or 0.4%, to 10,702.19.
Winners topped losers by 20 to 12 on the New York Stock Exchange, which converted all of its stocks to decimal trading Monday in a long-planned move that appeared to be glitch-free.
Winners beat losers by 23 to 16 on Nasdaq. Trading volume on both major markets was well below recent peaks.
The Fed is widely expected to cut its benchmark short-term interest rate by half a point, to 5.5%, when policymakers conclude their meeting Wednesday.
That assumption is already built into many stocks’ prices, experts note. The Nasdaq index has surged nearly 15% this year. Although the Dow index is down 0.8% year to date, most broader indexes have gained, though not on Nasdaq’s scale. The blue-chip Standard & Poor’s 500, for example, is up 3.3% this year.
Technology stocks were buoyed Monday by a number of merger announcements, including Ariba’s deal to buy Agile Software for more than $2 billion. Agile jumped $7.56 to $50.38. It had been as high as $98 last year. Ariba fell $1.63 to $38.38.
Some traders were impressed by the tech sector’s ability to shake off another warning from Cisco Systems that the current quarter is looking “more challenging” than the company projected a few weeks ago.
“This has become a hallmark of the markets recently. We get soft corporate news and we don’t dive. We ease our way around it, which I find encouraging,” said Larry Wachtel, market analyst at Prudential Securities.
Cisco shares fell $1.13 to $37.25, though they ended well above their low of $35.50.
In the bond market, long-term Treasury bond yields continued to move higher, despite the assumption that a Fed rate cut is imminent. Traders said yields may already reflect the Fed move.
The yield on the five-year Treasury note ended at 4.96%, up from 4.92% on Friday.
In futures trading, natural gas plunged 13% to its lowest price in two months on expectations that mild weather this week in the Midwest will reduce demand in the largest market for gas heat.
Natural gas for February delivery fell 96.3 cents to $6.293 per million British thermal units on the New York Mercantile Exchange. It was the lowest closing price for a most-active contract since Nov. 29.
Among Monday’s highlights:
* Beaten-down personal computer stocks gained even before Gateway announced that its chief executive was resigning. Gateway rose 89 cents to $21.66 in regular trading, then jumped to $23.50 in after-hours trading.
Among other PC shares, Apple Computer rose $2.13 to $21.69 in the regular session, while Compaq gained $1.05 to $23.55 and Hewlett-Packard jumped $3.09 to $37.53.
* Many software stocks were strong, including PeopleSoft, up $3.06 to $49.44; Rational Software, up $4.63 to $55; and Check Point Software, up $10.50 to $165.44.
Also, Akamai Technologies rose $2.06 to $31.81. The company, which sells a service that speeds the delivery of data over the Internet, was hired by Microsoft to run four backup servers for its major Web sites following hacker attacks against them last week.
* Networking stocks were weak with Cisco. Alcatel fell $1.92 to $55.89, Brocade Communications dropped $3.44 to $104.94 and JDS Uniphase lost $2.31 to $57.31.
* Sellers clipped some consumer-related shares, including Procter & Gamble, down $2.40 to $66.85; Schering-Plough, down $2.75 to $48.75; and Coca-Cola, down 82 cents to $57.12.
But retail stocks were mostly higher, led by American Eagle Outfitters, which surged $7.06 to $57.88 on confidence about its 2001 sales outlook.
Other retail winners included Sears, up $1.11 to $37.91; Best Buy, up $2.05 to $49.55; and Abercrombie & Fitch, up $2.75 to $30.
* Peet’s Coffee, a new stock issue last week, continued to zoom. It jumped $3.06 to $16.13.
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Market Roundup: C11, C12
