Bulls vs. bears on Wall St.

February 22, 2002 Posted: 2240 GMT

By Staff Writer Alexandra Twin

NEW YORK (CNN/Money) -- A tremendously volatile four sessions on Wall St. ended with the markets little changed from where they began Tuesday.

The disparity between battered investor confidence following Enron and signs of improvement in the economy was played out on a day-to-day basis during the holiday-shortened trading week, with slumps erasing rallies only to be countered by renewed advances.

The Dow Jones industrial average closed the week up 65.11, or 0.66 percent, to finish at 9,968.15; the index finished Friday up 133 points. The Nasdaq composite closed the week down 80.6 points, or 4.4 percent, at 1,724.54, though it finished Friday up 8 points. The Standard & Poor's 500 index also closed the week down, by 14.36 points, or 1.30 percent, to close at 1,089.84, although Friday it added almost 9 points.

Strength in traditional, long-established names like General Motors and Procter & Gamble dragged investors away from the nervous selling in tech names, giving the Dow a boost at the expense of the Nasdaq.

Weakness in Computer Associates, which said it was under a preliminary Securities and Exchange investigation for potential accounting discrepancies and a UBS earnings estimate cut of Cisco Systems had burdened the techs throughout most of the day.

Also earlier in the day, a published report revealed that J.P. Morgan Chase's Enron account is the subject of a Federal Reserve probe.

On the opposite end of the spectrum, a survey by the National Association for Business Economics showed that most economists think that the recession already is over and that the economy should pick up steam in the second half of the year and through 2003. Reports earlier in the week showed improvement in the manufacturing and services sectors.

An 11th hour about face on the Dow Friday seemed to second the economic messages, propelling markets higher by the close. It was the fourth abrupt turnaround in a week -- shortened by Monday's observance of the Presidents Day holiday -- in which markets almost literally see-sawed: the Dow made a triple-digit loss Tuesday, a triple-digit gain Wednesday, a triple-digit loss Thursday and a triple-digit gain Friday.

"You've got the economy and the Enron situation, these two opposing features and it's just a question of who wins out on any given day," Jon Burnham, chairman and CEO at Burnham Securities told CNNfn's Street Sweep. (517K WAV) (517K AIFF)

Asian stock markets finished mixed Friday, with Tokyo's Nikkei index ending 0.6 percent higher. European bourses closed lower.

Treasury prices rose, with the 10-year note yield closing at 4.83 percent, down from 4.86 percent late Thursday. The dollar was higher versus the yen, but fell against the euro. Light crude oil futures rose 9 cents to $21.04 a barrel in New York. Gold was lower.

Market breadth was positive. On the New York Stock Exchange, advancers beat decliners 5-to-3 as 1.38 billion shares traded. On the Nasdaq composite, winners beat losers 4-to-3 as 1.82 billion shares changed hands.

JDSU, Cisco lead actives

On Friday, Merrill Lynch reiterated its "near-term buy" rating on Procter & Gamble (PG: up $2.50 to $85.60, Research, Estimates), while Banc of America Securities raised its rating on General Motors (GM: up $1.38 to $53.11, Research, Estimates) from "market perform" to "buy."

In addition to those two, other key Dow stocks that advanced included Exxon Mobil (XOM: up $1.57 to $40.72, Research, Estimates), 3M (XOM: up $1.57 to $40.72, Research, Estimates), and IBM (IBM: up $2.07 to $98.45, Research, Estimates).

But watering down the Dow's gains was the J.P. Morgan Chase (JPM: down $0.95 to $28.19, Research, Estimates) news. The Federal Reserve is investigating the company's accounting for commodity-related transactions with Enron.

"Accounting and other issues are still overriding the market. There have been some reasonably good economic numbers but the earnings situation hasn't gotten as good as it could. You could make a case for the bull and the bear," Peter Mancuso, a New York Stock Exchange specialist with Performance Specialist Group, told CNNfn's Market Call.

"It's like watching a deer in front of the headlights," he added. (423K WAV) (423K AIFF)

Nasdaq struggles with its fickle techs

A rash of downgrades weighed on the Nasdaq's tech issues, already beaten down this year.

UBS Warburg lowered its 2002 and 2003 earnings-per-share estimates on Cisco Systems (CSCO: up $0.13 to $15.24, Research, Estimates), which initially sold off on the news but recovered by late day.

CIBC World Markets cut fiber-optic gear maker JDS Uniphase (JDSU: down $0.28 to $4.98, Research, Estimates) to "hold" from "buy."

UBS Warburg lowered its 2002 and 2003 earnings-per-share estimates on Cisco (CSCO: up $0.13 to $15.24, Research, Estimates), citing channel checks that showed a lack of significant pickup in the U.S. enterprise market. On Thursday, a New York Post article alleged 12 officials failed to fully disclose their interests in a Silicon Valley partnership that may have benefited from its connections to the networking equipment company.

Merrill Lynch said it sees a buying opportunity in computer hardware maker Dell Computer (DELL: down $0.01 to $23.76, Research, Estimates) due to its recent decline, although it does not expect personal computer demand to pick up until the third quarter.

J.P. Morgan upgraded communication chipmakers Xilinx (XLNX: up $0.92 to $34.93, Research, Estimates) and Altera (ALTR: up $0.05 to $19.87, Research, Estimates) to "long-term buy" from "market perform" after Xilinx upped its fiscal fourth-quarter revenue forecast late Thursday.

Nextel Communications (NXTL: up $0.15 to $4.65, Research, Estimates) suffered a Salomon Smith Barney downgrade to "neutral" from "outperform" one day after the wireless communications services provider delayed fully reporting its earnings.

In the day's biggest potential deal, Northrop Grumman (NOC: down $7.85 to $109.95, Research, Estimates) has proposed buying TRW (TRW: up $10.50 to $50.30, Research, Estimates) for $5.9 billion, or $47 per share.

No. 2 U.S. electronics retailer Circuit City (CC: down $7.04 to $16.55, Research, Estimates) warned its fourth-quarter results will miss estimates due to a sales slump in January and February. The company also said it will spin off its CarMax business into a separate publicly traded company.

Search

CNN.com CNNSI.com CNNfn.com The Web