Stocks Rally Despite RIM Warning, Job Losses
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A warning from Research In Motion (NASDAQ: RIMM) and signs that the economy continues to weaken sent the stock market to steep early losses on Wednesday, but a glimmer of hope in the mortgage market was all it took for stocks to finish the day with a flourish.
RIM shares rose 4.4% despite saying its November quarter earnings and sales will come in below expectations. But with the stock down about 75% from its 52-week high, the warning apparently was largely priced in. RIM said it expects earnings of 81-83 cents a share and sales of $2.75-$2.75 billion, below 91-cent and $2.96 billion Thomson Financial estimates.
Palm (NASDAQ: PALM) fell in the wake of its warning, but Cisco (NASDAQ: CSCO) gave the market some good news after CEO John Chambers reaffirmed the company's long-term growth target of 12% to 17%.
Marvell (NASDAQ: MRVL) also gave the tech sector a welcome boost, soaring more than 20% after beating estimates.
ADP reported a worse than expected private sector job loss of 250,000, raising fears that Friday's government nonfarm payrolls report could show job losses for November of well over 300,000. The Federal Reserve's Beige book summary of economic conditions also showed widespread weakness, but signs of some credit market easing was taken as a hopeful sign.
Also boosting stocks was a report of sharply rising mortgage applications and reports that the government may take steps to lower mortgage rates sharply.
SanDisk (NASDAQ: SNDK) jumped 25% on speculation that Toshiba could make another play for the company.
Amazon (NASDAQ: AMZN) gained nearly 10% on reports of strong holiday sales traffic.
Micron (NYSE: MU) fell 5% on a Barclays downgrade.
The Nasdaq rose 42 to 1492, the S&P gained 22 to 870, and the Dow rose 172 to 8591. Volume rose to 7.09 billion shares on the NYSE, and 2.23 billion on the Nasdaq. Advancers led by a 25-13 margin on the NYSE, and 17-11 on the Nasdaq. Upside volume was 77% on the NYSE, and 79% on the Nasdaq. New highs-new lows were 30-165 on the NYSE, and 6-108 on the Nasdaq.