Spring Fever Grips Investors

For the third time in the past four trading days, stocks gained across all sectors Tuesday, even as an earnings season that promises to deliver yet more pain to investors gets under way.

While not quite as spectacular as last Thursday’s advances, Tuesday’s run-up could fuel speculation that the worst of the market’s woes are over and that recovery is on the horizon, especially given the Dow’s climb back above the psychologically significant mark of 10000. The Nasdaq, meanwhile, has pulled within sight of the 2000 mark after appearing to be headed down toward 1500 just a few days ago.

Here’s how the major U.S. exchanges and key indexes performed:

             4/10 Close     Gain     %Change

Dow Jones     10102.74     257.59      2.6%
Nasdaq         1852.03     106.32      6.1%
S&P 500        1168.38      30.79      2.7%
ISDEX           207.17      21.68     11.7%

As the chart above shows, Internet and tech stocks led Tuesday’s rally, with internet.com’s Internet Stock Index, or ISDEX, closing above 200 for the first time in April. Forty-eight of the 50 ISDEX members posted gains, with a dozen rising at least 20%. All 13 Internet sectors had more advancers than decliners. (For full sector breakdowns, visit WSRN’s Internet sectors page.)

Many investors now seem to believe that the slew of corporate warnings regarding Q1 numbers have been built into some stock prices. Cellular phone maker Motorola , for example, saw shares climb 13.0% to $13 in anticipation of the company’s Q1 report, which was to be released after Tuesday’s market close and which was expected to show MOT’s first quarterly loss in more than 15 years.

But MOT already had lost 23% on Friday, falling to $11.50 — its lowest closing price since 1993 — after Credit Suisse First Boston released a report speculating that lower demand would cause MOT to miss profit and sales forecasts for 2001.

(For earnings reports, visit our earnings calendar and our reported-earnings page.
For after-hours quotes and news, visit After Hours Trading.)

E-commerce software vendor Art Technology Group soared 32.1% to $5.60, bouncing off Monday’s closing price of $4.24, its lowest since going public in July 1999. ARTG is down 81.7% this year, and 53.3% in April.

Caching appliance maker CacheFlow rose 30.6% to $4.70, either because it 1) is bouncing off all-time lows itself, or 2) investors were impressed with the company’s announcement that the Oslo Stock Exchange in Norway has deployed CFLO’s cIQ Server Accelerator.

Online broker E*Trade Group gained 21.2% to $7.55 after reporting that Q1 profits remained unchanged at break-even, despite a drop in revenues.

April 10, 4 p.m.: Quite a day. The Nasdaq broke its January 31 downtrend
line in style today, but before we get too excited, a look at the bigger
picture is in order (first chart): the Nasdaq still has two more
downtrend lines from this bear market. Still, it’s a good start. Now
we’ll see if traders are still feeling ebullient after a few earnings
reports. The biggest this week will be Thursday morning, when Juniper
Networks and GE report. A bottom may be in, but we wouldn’t rule out a
retest of the lows this month, especially given that pesky gap at 1638
on the Nasdaq. The S&P 500 took out its main downtrend line from late
January (the gray line in the second chart), but ran into its highest
possible downtrend line (the blue line). The Dow cleared 9992
resistance, only to run into one of many broken supports from
10,000-10,500 (third chart). A lot of broken supports are now
resistance, and there are a lot of potential sellers looking to get out
even. A good sign is that the treasury yield curve is very close to
straightening out for the first time in a year (fourth chart). One
observation from a seasoned chart watcher: the Dow is above the level
where the Fed cut rates for the third time (10,020), but the S&P (1181)
and the Nasdaq (1974) have yet to clear those levels. Not a small point:
except for a brief period in 1982, the only other time that three Fed
rate cuts failed to reverse a market decline was 1929-1932. And finally,
a layman’s fundamental indicator: the number of Cisco items for sale on
continues to rise, from 1800 last month to 2100 last week and 2300 today.
It’s going to be tough for Cisco to make much headway until that number
at least stops rising. It also makes you see why eBay’s stock has held
up so well.

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