Nasdaq swells above 2,000

Nasdaq swells above 2,000

Techs pace the rally

NEW YORK (CBS.MW) – The Nasdaq bounced above the 2,000 mark for the
first time in over a month Wednesday as techs flourished amid hopes that
most of the bad news is already reflected in stock prices.

Even a warning from Dow component Hewlett-Packard failed to deter the
bulls as investors reveled in reassuring news from Intel.

Goldman Sachs’s head of investment strategy Abby Joseph Cohen lowered
year-end targets on the S&P 500 to 1,550 from 1,650 and on the Dow
Industrials to 12,500 from 13,000. That represents gains of 30 percent
and 22.4 percent from current levels, respectively. Cohen said her
12-month forward price target for the S&P 500 for spring 2002 is
1,600.

Cohen reduced her longstanding 2001 estimate for S&P 500
operating earnings-per-share to $56.50 from $60. She also introduced a
forecast for 2002 EPS of $61.50, a projected gain of 9 percent vs. 2001
levels.

Cohen said that even with moderately reduced profit forecasts, stocks
are notably undervalued and offer sizable potential returns in the
coming months. "We do not expect an intractable recession and
expect profit growth to reaccelerate in the second half of 2001."

The Dow Jones Industrial Average ($DJ) advanced 120 points, or 1.2
percent, to 10,337.

The Nasdaq Composite ($COMPQ) swelled 89 points, or 4.7 percent, to
2,012 while the Nasdaq 100 Index ($NDX) climbed 87 points, or 5.3
percent, to 1,759.

The Standard & Poor’s 500 Index ($SPX) rose 1.4 percent while the
Russell 2000 Index ($RUT) of small-capitalization stocks added 1.5
percent.

Volume came in at 240 million on the NYSE and at 483 million on the
Nasdaq Stock Market. Market breadth was positive, with winners trouncing
losers by 15 to 10 on the NYSE and by 23 to 7 on the Nasdaq.

Specific movers

H-P (HWP) told investors that rapid deterioration in global
information technology spending would cause it to miss second-quarter
estimates. The company is now expecting EPS of 13 to 17 cents a share,
well below the forecast for earnings of 35 cents per share. Further, H-P
plans to slash up to 3,000 management positions. H-P said it has limited
visibility in this economic environment but currently expects flat
revenues in the third-quarter. Still, shares climbed 3 percent.

Intel (INTC) jumped 11.6 percent after posting late Tuesday a profit
from operations of 16 cents in the first quarter, beating the Wall
Street consensus estimate by a penny. Investors latched on to Intel’s
comment that its microprocessor business appears to have stabilized.

The Intel upgrades poured in. Prudential Securities upped the stock
to a "strong buy" from a "hold" rating Wednesday
based on evidence the company provided that it sees normal seasonal
demand trends for its core chips. And Banc of America Securities
upgraded the stock to a "buy" from "market
performer" based partly on expectations that the PC business has
bottomed. ABN Amro also raised its view on the chip monolith.

Fellow chipmaker Texas Instruments rose 2.9 percent. The chip maker (TXN)
said after the close Tuesday that it made 18 cents in the first quarter,
two cents ahead of the First Call estimate. TI said it expects another
20 percent sequential decline in revenue in the second quarter on
weakness in semiconductors across the company’s product line. TI said it
would cut an additional 2,500 jobs, or 6 percent of its work force, to
additionally lower costs.

Meanwhile, the earnings downpour continued Wednesday morning.

AOL Time Warner (AOL) registered first-quarter earnings of 23 cents a
share, topping estimates by 3 cents. Revenue climbed 9 percent during
the period and the Internet and media colossus said its America Online
unit added 2 million subscribers during the quarter, bringing the total
to nearly 29 million. The stock rose 4 percent in recent action.

Brokerage powerhouse Merrill Lynch (MER) posted first-quarter
earnings of 92 cents a share, down 21 percent from the $1.24 a share
last year and 2 cents ahead of the Wall Street estimate. Profits
declined amid a slump in retail order flow as stock prices dropped.
Shares added 2.6 percent.

Drug giant Pfizer (PFE) posted a profit from operations of 33 cents a
share in the first quarter, two cents ahead of the Wall Street estimate
and up 34 percent over the year ago period. Shares fell 2 percent.

Treasury focus

Government prices backpedaled on strength in the equity market.

The 10-year Treasury note was off 18/32 to yield ($TNX) 5.305 percent
while the 30-year government bond slumped 18/32 to yield ($TYX) 5.70
percent.

In economic news, the February trade gap narrowed to $26.99 billion
vs. expectations of a $32.7 billion deficit. It was the narrowest level
in 14 months. .

And leading economic indicators fell 0.3 percent in February vs. a
projected 0.2 percent increase. View Economic Preview and economic
calendar and forecasts.

In the currency space, dollar/yen edged down 0.3 percent to 122.87
while euro/dollar slipped 0.6 percent to 0.8782.