If They Go Up On Bad News…
A dire third-quarter warnings from Cisco was offset by a batch of extremely
tame inflation numbers, and that combination kept stocks flat for most of the
session as earnings season kicks into high gear. Stocks finished the day with
respectable gains, with the Nasdaq up 0.7%, the Dow up 0.5%, and the S&P 500
up 1.0%.Â
After watching stocks drift between green and red all day, traders were
pleased to see the positive close for the major averages despite the backdrop of
Cisco’s problems.Â
Volume was moderate as 1.8 billion shares traded on the Nasdaq and 1.1
billion shares changed hands on the NYSE.
In economic news, the March Consumer Price Index showed an increase of 0.1% which was slightly lower than the 0.2% increase analysts expected, and the CPI
core rate increased 0.2% which was in line with expectations.
New housing starts came in at 1.61 million units which was slightly below the
1.63 million that analysts expected. Both numbers support the case for additional rate cuts by the Fed.
“Each day is certainly a new adventure. The chairman of Cisco pretty
much summed up what business leaders and analysts are experiencing, that being
business conditions that have never been more challenging,” said Alan
Ackerman, Market Strategist, Fahnstock & Co.
“One by one, companies such as Kodak, Cisco, and Intel keep talking
about shortfalls in revenues and earnings and the lack of visibility ahead, so
my sense is that there is no way to be certain that we are in a turnaround
period for the economy or the market. Much will depend on what the Fed does next,”
he added.
According to preliminary numbers, the Dow rose 58.30 to 10,216.86, the Nasdaq
gained 13.50 to 1923.07, and the S&P 500 added 12.11 to 1191.79.
Top sectors were biotechnology
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up 2.7%, pharmaceuticals
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up 2.2%.
On the downside were forest and paper products
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gold and silver
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Despite the negative word from Cisco, the company managed to battle back from
its gap-open lows to finish down just .55 to 16.65 on nearly double average
volume.
Cisco received an after-hours boost thanks to Intel
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better-than-expected earnings. Both Intel and Cisco traded higher on the news
that Intel beat the Street estimates by a penny.
Other standouts in the tech arena included NVIDIA
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Software
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Dow winners included IBM
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SBC Communications
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down 2.9%, and Hewlett Packard
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Looking ahead, traders will be watching for Thursday’s new jobless claims
number which will be released at 8:30 AM ET. The Fed is definitely keeping an
eye on the increasing unemployment level, and Thursday’s report could help
indicate whether the Fed might launch an inter-meeting rate cut.