News of more job cuts and a revenue warning from Hewlett-Packard pressured stocks Thursday, but Wall Street held firm, extending a rebound that began a day earlier.
The market's gains, which were strongest in tech stocks, came late in a session that was characterized by choppy trading. Analysts didn't expect the upturn to last and noted that the fundamental problems that led to the market's sell-off Monday and Tuesday haven't disappeared.
That skepticism appeared justified after the market closed, when JDS Uniphase reported earnings well below expectations and warned of revenue shortfalls ahead.
The Dow Jones industrial average ended the regular session up 49.96 points, or 0.5%, at 10,455.63, adding to a 164-point advance Wednesday. During morning trading, the blue chips were down as much as 121 points.
Broader stock indicators also closed higher. The technology-focused Nasdaq composite index rose 38.64 points, or 2%, to 2,022.96, and the Standard & Poor's 500 index finished up 12.44 points, or 1%, at 1,202.93.
Advancing issues led decliners by a narrow 3-to-2 margin on Nasdaq and the New York Stock Exchange. Trading was active.
"We've had some pretty shaky days and it's nice to have a rebound. But we're not off to the races yet," said Matt Brown, head of equity management at Wilmington Trust. "There's still too much weakness in second-quarter earnings and the projections for the third quarter are not encouraging."
The session had a sour start as tech bellwether Hewlett-Packard said it was cutting 6,000 jobs--in addition to 4,700 previously announced--and expected to see third-quarter revenue decline as much as 16% from a year earlier, falling short of Wall Street's expectations. The Dow component fell $1.68 to $24.
But those losses were offset by strong gains in other Dow stocks, including American Express, which gained 71 cents to $38.77, and Boeing, which advanced $1.44 to $58.11.
The tech sector also managed to stay afloat despite mostly disappointing earnings news.
Investors shrugged off news of 12,500 new job cuts and a second-quarter loss at French networking company Alcatel, sending it up 82 cents to $15.82. The company previously announced 7,500 layoffs.
WorldCom rose $1.13 to $14.54 after the telecommunications company reported a drop in second-quarter profit but met estimates. The company said it expected full-year revenue growth of 12% to 15% in its high-growth business unit, WorldCom Group.
Compaq erased an early loss to gain 38 cents to $14.50 and was the third-most heavily traded on the NYSE. The personal computer maker sank initially on news of sharply lower profit and said revenue would keep sliding as a worldwide slump spread.
Still, analysts downplayed Thursday's market performance, describing it as part of a continuing rebound from the strong selling Monday and Tuesday that had sent the Dow down more than 330 points.
They say Wall Street remains skittish--as investors' reaction to JDS Uniphase illustrated--particularly about the technology sector, which has been weak for more than a year. In after-hours trading, JDS Uniphase tumbled $1.36, or 14%, to $8.11, its lowest level in 52 weeks, erasing a 68-cent gain in regular trading.
Wall Street's continuing misery is reflected in the three major stock indexes, which have made little progress since mid-April. Although the indicators are above their lows of 2001, they remain below where they started the year. The Dow has fallen about 3%, the S&P; nearly 9% and the Nasdaq has dropped 18%.
Analysts say a sustainable advance isn't likely to occur until confidence increases that the worst is over for companies--something that earnings reports have yet to indicate. The Federal Reserve's six interest rate cuts since January have also failed to bolster the economy.
"When tech stocks first came down, people said it was a great buying opportunity. Now people don't want to touch technology," said Mark Minervini, president of Quantech Research Group. "Their portfolios have been decimated . . . and something like that doesn't get repaired overnight. I think it's going to take another six months for the Nasdaq to bottom and really start making a small advance."
Market Roundup: C7-8