Nasdaq extends winning streak

Nasdaq extends winning streak

Dow slumps as drug, cyclical shares
retreat

NEW YORK (CBS.MW) – The Nasdaq managed to extend its winning streak
to three consecutive days Thursday as investors continued to revel in
the Fed’s surprise rate slash Wednesday.

But buyers of Dow stocks remained timid and the index slipped into
the minus column amid selling in drug and cyclical stocks.

"[The Fed] rate cut was a very welcome event. That is the good
news. The big question now is whether or not the rally is sustainable.
We have had a series of short covering rallies in the last few weeks.
The key to whether this is actually a sustainable rally depends on
earnings," commented Louis Navellier of the Navellier Performance
Funds.

With earnings expected to be down for both S&P 500 and Nasdaq
companies both this quarter and possibly next quarter, Navellier said
investors still remain very cautious.

Checking activity in the tech sector, software stocks paced the
upside as IBM responded favorably to its earnings results. Hardware and
chip stocks also got a decent bounce. In the overall market, most
sectors dripped in red ink, including drug, retail, oil service,
utility, biotech, paper, cyclical and financial issues. Only insurance
and gold stocks escaped the selling pressure. View the latest market
stats.

The Dow Jones Industrial Average ($DJ) shed 27 points, or 0.3
percent, to 10,588. Pushing the index lower were shares of
Hewlett-Packard, Caterpillar, Merck, Johnson & Johnson, Home Depot
and SBC Communications. Putting a lid on the downside was IBM’s
6.1-percent jump as well as gains in AT&T, Eastman Kodak, Microsoft
and Procter & Gamble.

The Nasdaq Composite ($COMPQ) added 21 points, or 1.1 percent, to
2,102 while the Nasdaq 100 Index ($NDX) advanced 21 points, or 1.2
percent, to 1,852.

The Standard & Poor’s 500 Index ($SPX) shed 0.2 percent while the
Russell 2000 Index ($RUT) of small-capitalization stocks lost 0.1
percent.

Volume came in at 198 million on the NYSE and at 470 million on the
Nasdaq Stock Market. Market breadth was mixed, with decliners outpacing
advancers by 13 to 10 on the NYSE while winners beat losers by 17 to 13
on the Nasdaq.

Techs keep going

Software stocks swelled Thursday as IBM attracted more buyers. Shares
of the Dow stock (IBM) put on 6.1 percent to $113 after reporting late
Wednesday a first-quarter profit of 98 cents a share, in line with the
Wall Street consensus estimate and up from the 83 cents a share earned
in the year-ago period. Big Blue’s revenue rose 9 percent and beat Wall
Street expectations. The company said it made progress in servers and
storage subsystems market share, where IBM competes with Hewlett-Packard
and Sun Microsystems. Goldman Sachs upped the stock to its "U.S.
Recommended list." Among other stocks in the group, H-P shed 3.5
percent while Dell rose 2 percent and Gateway gained 3.5 percent.

Storage giant EMC (EMC) matched lowered expectations by posting
first-quarter earnings-per-share of 18 cents. The stock swelled 5.6
percent while rivals Network Appliance added 1.2 percent and Emulex rose
3.8 percent.

In the semiconductor space, Cypress Semi (CY) reported a
first-quarter profit of 25 cents a share, two cents ahead of the lowered
Wall Street consensus estimate. Going forward, the company said it’s
forecasting a revenue decline of 20 to 24 percent in the second quarter
and expects single-digit earnings-per-share. First Call/Thomson
Financial pegs second-quarter EPS of 8 cents. Shares edged down 0.5
percent.

The earnings deluge

Among the Dow companies reporting Thursday, diversified conglomerate
United Technologies (UTX) posted a first-quarter profit of 86 cents a
share, a penny ahead of the First Call/Thomson Financial estimate and up
16 percent from the tear-ago period. The company reaffirmed its
confidence in meeting expectations of 15 percent EPS growth for the
year. The stock slipped 0.8 percent.

McDonald’s (MCD) reported a first-quarter profit of 29 cents a share,
matching the First Call estimate and below the 33 cents a share in the
year-ago period. Looking ahead, the Dow company said it’s optimistic
that 2001 earnings-per-share in constant currencies will grow within its
previously stated range of 6 to 10 percent. Shares ascended 1 percent.

Consumer products monolith Colgate-Palmolive (CL) said it made 44
cents a share in its first quarter, a penny ahead of the First
Call/Thomson Financial estimate. The stock rose 1.9 percent. Among other
stocks in the consumer group, Gillette continued to struggle after
missing Wall Street’s profit expectations Wednesday, shedding another 6
percent.

Treasury corner

Government prices remained mixed after a seesaw session Wednesday in
the aftermath of the Fed rate cut, which primarily benefited short-term
issues while long-dated Treasurys were unable to gain much traction on
the news.

The 10-year Treasury note was off 5/32 to yield ($TNX) 5.15 percent
while the 30-year government bond erased 9/32 to yield ($TYX) 5.68
percent.

On the economic front, weekly initial claims fell 10,000 to 385,000.
The Philly Fed Index for April came in at negative 7.2 from March’s
negative 23.5. View Economic Preview and economic calendar and
forecasts.

In the currency arena, dollar/yen lost 0.4 percent to 121.54 while
euro/dollar gained 0.6 percent to 0.8890.