Bottom In Place?

March 30, 2001
Daniel Beighley

Stocks closed out the quarter on a positive note Friday, thanks in part to
some encouraging economic numbers that had no negative surprises for traders.
Trading was orderly throughout the day, and the rise in the averages was fairly
broad-based. At the close, the Nasdaq and S&P 500 had risen 1.1% while the
Dow had lifted 0.8%.

The Nasdaq even managed to successfully test last week’s low and then claw
its way back for the positive close. Despite the positive close, the quarter
ends with all three major averages in the dog house. For the quarter, the Nasdaq
fell 25%, the S&P 500 lost 12%, and the Dow eased 8%.

Volume was decent, as 2.12 billion shares traded on the Nasdaq, and 1.27
billion changed hands on the NYSE.

The Michigan Consumer Sentiment Report showed a slight increase to 91.5 which
was slightly higher than January’s 90.6. Since analysts expected a reading of
90.5 on the report, the fact that confidence is holding up well might indicate a
rapid recovery in the economy.

The Chicago Purchasing Manager’s Index fell to 35 which was significantly
lower than the 43.2 reading analysts had expected. The number was the lowest
reading since 1982 and clearly shows the dramatic slowdown taking place in the
manufacturing sector.

In other economic news, personal spending rose 0.3% and personal income rose
0.4%. Both figures matched analyst expectations.

Traders remained cautious on the forward outlook for stocks, as many are
concerned about a possible wave of new earnings warnings and downward revisions.

“For anyone to think that there’s going to be a big rally after people
have cleaned house this first quarter is probably the slimmest chance. I think
it’s going to be a very bumpy market for certainly the next quarter,” said Tim
Heekin, Director of Trading, Thomas Weisel Partners.

“There’s going to be more and more negative pre-announcements and actual
reporting of companies in the next four weeks. People are dreadfully concerned
about what Cisco is going to say and what Microsoft is going to say. I just
think they’re probably not going to be good,” he added.

According to preliminary numbers, the Nasdaq gained 19.71 to 1840.28, the Dow
added 79.72 to 9878.78, and the S&P 500 rose 12.38 to 1160.33.

Bottom In Place?

BUY THE FEAR, SELL THE GREED

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