Telecom Fuels Bounce

Reassuring oil production comments from Saudi Arabia and profit reassurances
from Procter and Gamble helped inspire a broad-based bounce Thursday in all
three of the major averages. Particularly strong were the beleaguered
telecommunications stocks, which got a boost after Nortel Networks rallied after
receiving a downgrade. 

Stocks worked their way higher throughout the session and finished near their
highs of the day, with the Nasdaq rising 3.3%, the Dow gaining 1.8%, and the
S&P 500 tacking on 2.2%.

Volume increased by a few percent over Wednesday’s heavy levels, as 1.97
billion shares traded on the Nasdaq and 1.19 billion shares changed hands on the
NYSE.

"It’s acting very well today, and people are beginning to feel better already about this market. We’re getting into the end of the
pre-announcement period, and the feeling is that most of the bad news is behind
us," said Michael Lyons, Senior Trader, Morgan Stanley Dean Witter.

"We’ve had a couple of big, high-profile companies drop some bombs here. The news
from Intel and Kodak really rattled investors, but the feeling is that since we start to see earnings
beginning next week, anybody who has bad news has already sent it our way,"
he added.

According to preliminary numbers, the Nasdaq jumped 121.59 to 3777.89, the
Dow gained 196.07 to 10,824.43, and the S&P 500 added 31.69 to 1458.26.

Top sectors were telecommunications
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, up 5.5%, biotechnology
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, up 4.5%, semiconductors
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, up 4.2%, and forest
and paper products
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, up 3.7%.

Weakest sectors included oil services
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, down 0.1%, integrated
oils
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, down 0.9%, and gold and silver
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, down 2.1%.

Telecom winners included WorldCom
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, up 11%, Lucent
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, up
10%, Sprint
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, up 8%, and Nortel Networks
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, up 6%.

In the chips, big gains were had by Xilinx
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, up 10%, KLA Tencor
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,
up 10%, Novellus
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, up 8%, and Linear Technology
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, up 6%.

In the software group, standout Adobe Systems
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broke out to an
all-time high on double average volume and finished up 12 1/8 to 160 1/2.

Profit reassurances from Procter & Gamble
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sent the consumer
products giant up 8% to lead the Dow. Also strong in the Dow were Citigroup
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,
up 5%, SBC Communications
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, up 5%, Honeywell
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, up 4%, and
AT&T
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, up 4%.

Looking ahead, the Chicago Purchasing Managers Index is due out 10:00 AM ET,
and analysts expect a figure of 48.9%. Also due out at 8:30 AM ET are the
personal income and spending numbers.