Buyers re-emerged on Wall Street Monday as
investors temporarily set aside doubts about the economy and bet
that the Federal Reserve will lower interest rates before its March
20 meeting.
The enthusiasm was uneven, however. Blue chips soared ahead on
strong gains in manufacturing and pharmaceutical stocks, while
technology issues struggled to keep up.
In midday trading on Wall Street, the Dow Jones industrial
average rose 93.58 to 10,535.48.
The Nasdaq composite index advanced 6.90 to 2,269.41 and the
Standard & Poor's 500 index was up 8.01 at 1,253.87.
Analysts said there was renewed talk on Wall Street that the
Fed, which has already cut interest rates twice this year, would do
so again before its next regularly scheduled meeting.
Some market observers now believe the Fed will take that unusual
step because of significant declines in the stock market — the
Nasdaq is at a two-year low — and recent economic data showing
consumer confidence lagging.
The Dow got a boost from Home Depot, up $3.11 at $43.12, and
Merck, which rose $1.41 to $78.49. Farm equipment manufacturer
Caterpillar was up $1.51 at $41.60.
But the blue chip gains were limited by a profit warning from
consumer goods maker Procter & Gamble, which fell $4.63 to $70.40
after lowering its outlook for the second half of fiscal 2001
because of the financial crisis and currency devaluation in Turkey.
Technology stocks were mixed. Dow component Microsoft — which
asked a federal appeals court Monday to reverse a lower judge's
order to break up the company — gained $3.06 to $59.50.
But Intel was off $1 at $28.94, as was PMC-Sierra, down $5.81 at
$44.13.
Analysts said many on Wall Street were awaiting consumer
confidence numbers, a gauge of investor sentiment, due out Tuesday,
and scheduled comments by Fed Chairman Alan Greenspan before
Congress on Wednesday.
"This is one of those interludes in a downtrending market,"
said Larry Wachtel, market analyst at Prudential Securities, who is
skeptical the Fed will cut rates ahead of its March 20 meeting.
"Going from 9:30 to 4 p.m. on the upside and staying there is very
difficult."
Also Monday, information services provider 3Com said it would
cut 1,200 jobs because of soft market conditions. Its stock rose 22
cents to $9.25.
Advancing issues outnumbered decliners 9 to 5 on the New York
Stock Exchange, where volume came to 677.57 million shares,
compared with the 748.39 million reported at the same point Friday.
The Russell 2000 index rose 5.86 to 483.31.
Overseas, Japan's Nikkei stock average fell 0.3 percent. In
afternoon trading, Germany's DAX index was rose 2.0 percent,
Britain's FT-SE 100 was down 0.2 percent, and France's CAC-40
gained 1.8 percent.
