Stocks Gain On Hope Of Further Rate Cuts

Stocks rose Friday on hope that the latest economic reports could mean further rate cuts by the Federal Reserve. Traders shook off more negative news from Cisco.

The ISDEX rose 5 to 258, and the Nasdaq climbed 38 to 2149. The S&P 500 added 4 to 1260, and the Dow rose 78 to 10,990. Volume edged higher to 1.16 billion shares on the NYSE, but declined to 1.53 billion on the Nasdaq. Advancers led 18 to 12 on the NYSE, and 21 to 15 on the Nasdaq. For earnings reports, visit our earnings calendar at and reported earnings at For after hours quotes and news, visit our after hours trading site at

The employment report came in slightly stronger than expected, with a loss of 19,000 jobs in May, and the unemployment rate came in at 4.4% instead of the 4.6% expected by analysts. But at least one economist said the drop in the unemployment rate could be due to some people giving up on finding work. A weaker than expected National Association of Purchasing Management survey provided fresh evidence that manufacturing remains in recession.

Cisco , off .49 to 18.77, set tech stocks back with this quote from its latest SEC filing: “The recent slowdown in the general economy, changes in the service provider market, and the constraints on capital availability have had a material adverse effect on many of our service provider customers, with a number of such customers going out of business or substantially reducing their expansion plans. These conditions have had a material adverse effect on our business and operating results, and we expect that these conditions will continue for the foreseeable future.”

Openwave cleared 40 resistance once again, surging 2.61 to 40.94 on positive comments from Robertson Stephens and rumors of an impending investment from NTT DoCoMo.

Palm rose .70 to 6.33 on management comments that business and market share have been improving with the introduction of the m500.

Novellus rose 2.50 to 50.40 after saying its quarter is on target. Altera managed to gain 1.11 to 25.11 on an earnings warning.

Intel , up 1.69 to 28.70, and AMD , up 1.35 to 29.60, rose on Robertson Stephens comments that motherboard demand is stabilizing.

Sapient slipped .09 to 9.48 on negative comments from CS First Boston.

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Nice recovery today. Monday is another cycle turn date, so the turn may have come today, or it could arrive any time Monday or Tuesday. Given today’s low-volume gains, that turn could still be down. As long as the S&P 500 holds 1200 support and the Nasdaq holds 2000, the market looks okay; below those levels, a retest of the lows becomes likely. The Dow (first chart) closed just below the important 11,000 level, but the ability to recover off this week’s lows makes for a much nicer looking weekly candlestick than the index was sporting two days ago. 11,000 is critical resistance, and the index has support about every 100 points starting at 10,900. The Dow would trade with a negative bias below 10,600. The S&P 500 (second chart) once again turned back at the important 1265 level, the neckline of a potential inverted head-and-shoulders bottom. The index could find support in the 1218-1242 range. One positive is that the Nasdaq (third chart) is now firmly back above its September downtrend line, which is now around 2080-2100. 2052-2060 is the next support below 2080-2100. The Nasdaq 100 (fourth chart) is sitting right above important support at 1740-1760.

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