Positive news from European markets about telecoms stocks helped propel the Dow Jones Industrial Average and the Nasdaq Composite Index back to mid-March levels yesterday. The Dow surged over 300 points or almost 3 per cent by midday, rising above the 10,000 mark for the first time since March 20th. The last time the Dow closed above 10,000 was March 15th. Technology stocks blazed back, fuelling an 11 per cent increase in the Nasdaq over the last week. At the close, the Dow settled at 10,102.74, a rise of 257.59 to 2.62 per cent. The Nasdaq was more impressive, notching up gains of 6.09 per cent, or 106.29 points, to 1,852.00. The broader Standard & Poor's 500 advanced solidly to 1,168.38, up 30.79 points or 2.71 per cent.
The surge in buying came on the last trading day before the quarterly reporting season, which got under way last night with Motorola reporting after the close. Motorola's shares rebounded from an eight-year low reached last week after two profit warnings.
Analysts surveyed by First Call/Thomson Financial expect the company to post a loss of seven US cents a share on sales of $8 billion for the first quarter. Such a quarterly loss would be the first for Motorola in more than 15 years. "In our view, more important than actual results will be the company's revenue and profitability," commented Mr Jeffrey Schlesinger of UBS Warburg. He said analysts expected more job losses from the company which has already let 22,000 go worldwide since December. Motorola, employs around 500 people in Cork, recently closed an operation in Swords. Investors also snapped up beaten down shares in the absence of the familiar drum beat of profit warnings which have sent shares down to levels not seen since 1998. "That's really the driver today; no news is good news. No one warned overnight of any substance," said Mr Art Hogan, chief market analyst at Jefferies & Co. On the Nasdaq, three stocks rose for every one that fell, with gains in computer chip makers, hardware, software and telecommunications and telecom equipment makers in addition to Internet stocks.
Oracle, Microsoft, Amazon.com, EMC, Cisco and JDS Uniphase all showed strong gains. Optical networking firm Ciena rose $6.11 to $42.85.
The tech stocks were lifted by news of an upgrade of European telecom firms by Credit Suisse First Boston, which raised its weighting in European telecoms to "neutral" from "underweight". "A lot of this is telecoms-based, coming off of what we saw in Europe," said a trader at Lehman Brothers. The US markets were boosted by a surge in European exchanges after British telecom equipment maker Marconi did not warn on profits, despite rumours to the contrary on Monday which hit trading hard.
