Nasdaq Lifted by Brokers’ Positive Stances
The Nasdaq market rebounded Monday from last week’s 26-month lows as investors snapped up bargains among technology shares in a session that saw trading volume thinned by a winter storm.
Morgan Stanley Dean Witter and Merrill Lynch, two of Wall Street’s biggest houses, provided the stimulus for the buoyant mood, analysts said, by advising clients that now is the time to get back into U.S. equities.
“There’s some bottom fishing and some cash being put to work,” said Richard Babson, president of Babson-United Investment Advisors. “But there’s no blizzard of activity. The blizzard is happening outside.”
The technology-laden Nasdaq composite index rose 25.29 points, or 1.2%, to 2,142.92, off an intraday high of 2,163.09 reached earlier in the session. In February, the Nasdaq fell 22.4%, its third-worst month ever.
The blue-chip Dow Jones industrial average climbed 95.99 points, or 0.9%, to 10,562.30. The broader Standard & Poor’s 500 index gained 7.23 points, or 0.6%, to 1,241.41.
Volume was thin, with 878 million shares trading on the New York Stock Exchange, one of its lightest trading days this year. Some 1.4 billion shares traded on Nasdaq. Many traders stayed home or left work early Monday because of a heavy late-winter storm forecast to hit New York City.
Merrill Lynch and Morgan Stanley Dean Witter gave investors some motivation to buy equities selectively, analysts said, after the big Wall Street firms advised clients to buy U.S. stocks after five weeks of sharp declines, a slide greased largely by chronic concerns about the flagging economy.
“We do not believe it’s the time to be making big bets, but we do think it makes sense to add further to equities,” said Jay Pelosky, co-chair of Morgan Stanley’s Global Asset Allocation Committee. The Federal Reserve “continues to be aggressive in easing interest rates, and other central banks around the world” are likely to make similar cuts, he said.
Citing the Fed-easing campaign as well, Merrill Lynch moved its U.S. exposure to “overweight” from “neutral,” adding that a lot of bad corporate news already has come out into the open.
Many of Nasdaq’s most active issues and top names occupied positive ground after their battering last week. Web gear giant Cisco Systems rose 89 cents to $23.08, while Microsoft gained 75 cents to $57.44 and fiber-optics company JDS Uniphase leaped $1.92 to $28.31.
Investors shrugged off poor growth forecasts from three computer chip makers, Vitesse Semiconductor, LSI Logic and Cypress Semiconductor. All three stocks rose, after falling in recent weeks.
Soft drink maker Coca-Cola, one of the 30 companies that make up the Dow average, fell $2.35 to $50.20. The Atlanta-based company said Sunday that Jack Stahl, its president and chief operating officer, had resigned. Coca-Cola also announced the formation of four strategic business units aimed at creating a more nimble organization.
Weakness in the Baby Bell company SBC Communications, down $1.16 to $45.41, and drug giants Merck, off 62 cents at $79.53, and Johnson & Johnson, down 67 cents at $98.48, also kept a lid on the Dow’s gains.
The National Assn. of Purchasing Management said its gauge of nonmanufacturing activity rose to 51.7 after plunging a sharp 11 points in January to 50.1. A reading above 50 indicates the sector is expanding.
Some investors are hoping the Fed will cut more than the expected 50 basis points at its March 20 meeting.
Market Roundup, C14-15
