Markets & Finance

At Last, an Honest-to Goodness Rally


For Wall Street, all it took was a day with some moderately good news.

The stock market rallied Thursday, Apr. 5, with Dow Jones Industrial Average registering its the second-largest one-day point gain in its history. What sparked the upturn? A piece of news that in former days would have been greeted with a yawn: PC maker Dell Computer (DELL) confirmed its first quarter guidance of revenues of $8 billion and earnings of $0.17 per share. With investor confidence shattered by a number of marquee tech names announcing that they wouldn't meet the Street's already lowered expectations, Dell's news came as a tonic.

Also contributing to the gains was an upbeat comment by a Lehman Brothers analyst on Yahoo! (YHOO).

Thursday's tremendous upsurge has many thinking the market's bottom may have been reached.

Arthur Hogan, chief market analyst at Jefferies & Co. is one of those people, though he remains somewhat cautious. "It's one of those things where it won't take much to upset the apple cart," he says. "But I think that if we get the right economic data Friday on the employment front and we don't have as many blue chip companies giving us earnings warning, we may get out of this week having formed a bottom." The analyst believes earnings reporting season, which hits full swing next week, will be a lot kinder to the market than was earnings pre-reporting season.

Scott Bleier, chief investment strategist at Prime Charter Ltd. in New York City, believes the market bottomed with its abysmal performance Apr. 3. From here on, he thinks portfolio managers and momentum players will be move in, feeding the market with cash inflows and boosting the indexes.

"I think Tuesday was a very real near-term bottom as it coincided with a number of factors," he says. "First, not one person I spoke with wanted to take a chance and buy a stock because it was like catching a falling knife." He added that other factors included what he feels was the culmination of mutual fund selling to meet potential redemptions before the Apr. 15 tax deadline.

"On Tuesday we had a level of fear on Wall Street that we had not yet seen, even with all the fear that had been reported all that time, it was never worse than Tuesday," Bleier says. "It was like being a boxer and you're being beaten and nobody throws the towel in and you're at the point of unconsciousness and finally the fight is over and you can recuperate. This market has been like that."

The Dow Jones Industrial Average recorded its largest point gain ever, finishing up 402.63 points, or 4.23%, to 9892.07. The Nasdaq composite posted the third largest percentage gain in its history, rising 146.18 points, or 8.92%, to 1784.98. It was the fifth largest point gain for the broader Standard & Poor's 500 index as it closed up 48.19 points, or 4.37%, to 1151.44.

Treasury Markets

Treasuries ended lower in response to the record rally in the stock market. Traders are looking ahead to Friday's payrolls report.

Stocks in the News

FedEx Corp. (FDX) says it is unlikely it will hit its prior Q4 EPS forecast of $0.85-$0.90. The company sees worse than expected 4.4% US domestic express package volume.

Dean Foods (DF) agrees to be acquired by Suiza Foods (SZA) in a deal valued at $2.5 billion. In the transaction, Dean Food shareholders will receive $40.92 per share, consisting of $21 in cash and 0.429 of a Suiza share.

Neiman-Marcus Group (NMG.A) posted 4.7% March same store sales decline, 3.6% total sales decline. Consequently, the company forecasts $0.80-$0.85 Q3 EPS and flat fiscal 2001 EPS compared with thes previous year.

World Markets

The Financial Times-Stock Exchange 100 index closed up 86.10 points, or 1.56%, to 5621.80 as the Bank of England cuts key rates 25 basis points. In Germany, the DAX Index ended higher by 178.92 points, or 3.20%, to 5776.58. In France, the CAC 40 gained 86.74 points, or 1.71%, to 5158.56.

In Japan, the Nikkei finished up 138.60 points, or 1.05%, to 13381.38. The Hang Seng lost 520.51, or 4.14%, to 12063.71. By Alan Hughes in New York


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