Dow climbs above 10,000

Dow climbs above 10,000

Nasdaq rallies 4% on across-the-board tech
surge

NEW YORK (CBS.MW) – Technology issues skyrocketed across the board
Tuesday, sending the Dow Industrials above the 10,000 mark for the first
time in three weeks and handing the Nasdaq a 4.2-percent gain.

With the exception of gold, ever sector participated in the rally,
with gains particularly heady in the Internet, chip, software, utility,
biotech and financial segments.

“[The market’s] backing and filling is good for laying a base
from which a better rally can develop. Although it feels like karate
chops across the neck, the action of direction changes within a rising
pattern is how bottoms are formed,” commented Robert Dickey,
technical strategist at Dain Rauscher.

“The market now has us conditioned to expect lower prices, and
the first part of any uptrend will likely be doubted. The earnings
season may turn out better than people think, as expectations are
dramatically depressed compared to previous quarters. The bullish
sentiment will take longer to improve, however, as the timing of both
the earnings or economic turnaround keeps getting pushed further
out,” Dickey concluded.

The Dow Jones Industrial Average ($DJ) put on 200 points, or 2
percent, to 10,046.

Spearheading the Dow’s gains were shares of Alcoa, Citigroup, 3M,
Intel, Hewlett-Packard, J.P. Morgan Chase. Among the few downside movers
were shares of Merck, United Technologies and Procter & Gamble.

The Nasdaq Composite ($COMPQ) gained 73 points, or 4.2 percent, to
1,819 while the Nasdaq 100 Index ($NDX) ascended 84 points, or 5.7
percent, to 1,565.

The Standard & Poor’s 500 Index ($SPX) added 2.2 percent while
the Russell 2000 Index ($RUT) of small-capitalization stocks rose 1.3
percent.

Elsewhere, CIBC World Markets raised its equity exposure in a
balanced portfolio to 75 percent from 55 percent on Tuesday. The
fixed-income allocation was lowered to 20 percent from 35 percent and
cash cut to 2 percent from 5 percent. The firm said the momentum in
equities will be driven by a new earnings cycle starting in 2002. CIBC’s
focus is on technology and cyclicals while an underweight position is
held in utilities and big-cap pharma and a market weight in energy and
financials.

Meanwhile, volume stood at 182 million on the NYSE and at 294 million
on the Nasdaq Stock Market. Market breadth was decidedly positive, with
winners taking out losers by 17 to 8 on the NYSE and by 21 to 8 on the
Nasdaq.

Chip focus

Chip stocks were among the biggest upside movers within the tech
group and buyers sent the Philly Semiconductor Index ($SOX) up 6
percent.

Motorola (MOT), which will report its first-quarter results after the
close, added 6.5 percent to $12.28. First Call/Thomson Financial expects
the chip and mobile phone concern to register a loss of 7 cents a share.
It would be Motorola’s first loss in more than 15 years.

Cypress Semiconductor (CY), which saw its earnings estimates slashed
by Lehman Brothers on Monday, warned that first-quarter revenue would
come in at $262 million, lower than the previous estimate of $280
million. Cypress estimates earnings-per-share to come in at 23 to 26
cents versus the previous guidance of 30 to 34 cents a share. Shares
rose 3 percent.

“We barely turned positive on bookings with cancellations
offsetting virtually every order we received,” Cypress said in a
statement, adding that while it doesn’t have visibility, it’s estimating
that the second quarter will be another down one in the $200-210 million
revenue range with single-digit earnings per share before goodwill.

In the meantime, cautious analyst notes on the chip sector continued
to flow. CS First Boston lowered its growth rate for semiconductor
capital spending in 2001 from negative 20 to 25 percent to negative 30
to 35 percent. CSFB said it remains cautious that the market is too
focused on the cyclical issues of inventory and capacity and not focused
enough on the more structural issues of product cycles. “Even after
inventories peak, lack of robust product cycles will weigh on second
half demand for capital equipment,” the firm said, adding that it
expects the second quarter earnings season to bring more
disappointments.

On the chip industry, CSFB said it’s concerned that most of the
companies that pre-announced on the downside informed investors of
shortfalls in late February and early March. “We believe that
business fundamentals further deteriorated through the end of the
quarter,” the firm said, adding that it believes it’s still too
early to buy the group.

Specific movers

Aetna (AET) plunged 18.6 percent after telling investors that
first-quarter results are expected to be significantly lower than Wall
Street expectations because of increased medical costs due to higher
utilization of health care. As a result, the company said it can’t
confirm its previous projection of operating earnings per share of $1.20
to $1.30 for the full year.

UBS Warburg lowered its rating on Dow stock United Technologies (UTX)
to a “hold” from a “buy” to reflect the potential
for unfavorable sentiment in the aerospace arena to negatively impact
earnings multiples in the near term. The firm also cut its view on
Ingersoll-Rand (IR) to reflect the risk of further earnings
disappointments in the near term and downgraded Parker Hannifin (PH) due
to the likelihood of negative near-term earnings revisions. United
Technologies shaved 1.1 percent while Ingersoll-Rand rose 0.4 percent
and Parker Hannifin advanced 0.6 percent.

Treasury action

Predictably, government issues backpedaled significantly with
equities in the spotlight.

The 10-year Treasury note slipped 17/32 to yield ($TNX) 5.01 percent
while the 30-year government bond tumbled 1 1/8 to yield ($TYX) 5.57
percent.

No economic news is set for release Tuesday. View Economic Preview
and economic calendar and forecasts.

In the currency arena, dollar/yen erased 0.5 percent to 124.52 while
euro/dollar edged down 0.1 percent to 0.8951.