Blue Chip Rally Fades
N E W Y O R K, April 30, 2001 -- Tech stocks rose, though blue chips and the broader market fell asApril's final day brought "window-dressing" trade with littleconviction and relatively light volume.
The Dow Jones industrial average fell 75.08 points,or 0.69 percent, to close at 10,734.97, according to the latestdata. But the Nasdaq Composite Index added 40.79points, or 1.97 percent, to 2,116.47. Both indexes finishedwell under earlier highs that were reached in part on news U.S.personal income rose a surprisingly large 0.5 percent in March,while consumption rose 0.3 percent, beating market forecasts.The Standard & Poor's 500 Index fell 3.57 points, or0.28 percent, to 1,249.48.
"The question is not, "What happened to the rally?' but whyit materialized, to begin with," said Peter Coolidge, managingdirector of equity trading at Brean Murray & Co. "There is nota lot of conviction today. It is the last day of the month, sothere may be some closing out of positions, adding to others.
"The tech market is doing better as people did not want toget caught under-invested if the economy is stabilizing. But inblue chips, there is some profit-taking from the gains ofrecent weeks," Coolidge said. He also noted the U.S. tradingvolume was light, due to holiday-shortened trading weeks inJapan, Europe and other parts of the world.
Today's trade added to the Nasdaq's big gains for themonth, with the composite index unofficially rising 15 percentin April, the fifth-best month ever, according toMarketHistory.com.
Among active issues, discount retailer Dollar General Corp. fell after it said it is investigating accountingirregularities and possibly fraudulent behavior, and will needto delay its quarterly results, annual report and annualmeeting. Dollar General slumped $7.38 to $16.50. ComputerAssociates slid $3.06 to $32.19 after The New York Timessaid the enterprise software maker has systematicallyoverstated its revenues. The company, however, defended itsbusiness and accounting practices.
Earnings Season Winds Down
The lack of any major earnings disappointmentsalso underpinned the market earlier in the day, analysts said, as well asmonth-end "window dressing," as fund manager pack theirportfolios with the best performers and dump the underperformers.
The news was not all good. Discount retailer Dollar GeneralCorp., spun lower after saying it is investigatingaccounting irregularities and possible fraudulent behavior, andas a result its quarter results, annual report and annualmeeting will be delayed. Dollar General slumped $7.63 to$16.25.
Signs of slowing U.S. growth and its impact on CorporateAmerica's bottom line have also not completely evaporated.Telecommunications software maker Comverse Technology Inc. said it will cut 6 percent of its staff because of the economic downturn. Comverse fell $3.63 to $66.48.
But technology stocks were generally buoyant, benefitingfrom hopes held by some that that beaten-down sector will leadthe economy out of its slump. Software maker Microsoft Corp. rose $1.31 to $68.43, while computer chip maker Intel Corp. rose 77 cents to $30.95 — both lifting the blue-chip Dow.
Among other stocks to watch was drug store chain DuaneReade , which beat analysts' consensus forecasts for itsper-share earnings.
As the corporate earnings season winds down, however,traders are expected to turn to a number of key economicreports due out this week for direction, including the U.S.April jobs report on Friday.
On the Economic Calendar
Investors have to wait until Tuesday, forthe National Association of Purchasing Management's closelywatched survey of the manufacturing sector.
Gross Domestic Product (GDP), the broadest measure ofeconomic activity, grew in the first quarter at a 2 percentannual rate, double analysts" consensus forecasts, boosted byupbeat consumer spending, the Commerce Department said onFriday. That means the world's largest economy grew for its10th year in a row.
The Nasdaq Composite Index climbed 40.82 points, or2.01 percent, to end at 2,075.70, led by Web gear maker CiscoSystems Inc. and computer chip giant Intel Corp..
The Dow Jones industrial average bolted up 117.70points, or 1.10 percent, to close at 10,810.05. That put theblue-chip index in the positive for the year for the first timesince March 8.
The broader Standard & Poor's 500 Index added 18.53points, or 1.50 percent, to finish at 1,253.05.