It is a market truism that stocks tend to bottom long before recessions end, so perhaps investors can find some solace in the market’s ability to rally in the face of some pretty dismal news on Thursday.
A warning from Cisco of a sharp slowdown and the weakest January for retail sales in at least four decades sent stocks plunging in the early going, yet they recovered to end the day with modest gains. Even Cisco, which opened 5% lower, finished the day more than 1% higher.
About the only bright spot — if it could be called that — is that pending home sales fell only 1.5% in December, half of November’s decline. The market recovery began as soon as that news hit at 10 a.m. Eastern.
With the Federal Reserve aggressively cutting interest rates and the House and Senate working feverishly on an economic stimulus plan, perhaps investors see better times ahead and are willing to place a bet with stocks at their lowest valuations since 1995.
But not all stocks followed Cisco higher. EDS plunged 9% after the company’s earnings and sales missed Wall Street estimates because of large contracts that were delayed in the fourth quarter, and the company also lowered 2008 guidance.
HP was the Dow’s biggest loser, down 4% after Goldman Sachs removed the company from its “Technology Framework Favorite Value” list, according to AP.
Akamai and PC Mall gained on their results, while Level 3 and Wavecom lost ground on their earnings reports.
The Nasdaq rose 14 to 2293, the S&P climbed 10 to 1336, and the Dow gained 47 to 12,247. Volume rose to 4.59 billion shares on the NYSE, and 3 billion on the Nasdaq. Advancers led by a 21-12 margin on the NYSE, and 17-12 on the Nasdaq. Upside volume was 63% on the NYSE, and 65% on the Nasdaq. New highs-new lows were 16-100 on the NYSE, and 40-183 on the Nasdaq.