Markets Finish Higher on Intel

Investors got a mixed bag of earnings reports. Computer Sciences Corp. rose $3.61 to $37.15 after the world's No. 3 computer services supplier said earnings fell but were in line with lowered forecasts.

But Global Crossing Ltd., which built a high-speed fiber-optic network, slumped $1.32 to $5.68 after posting a wider quarterly loss, slashing its revenue-growth outlook for the year, and planning to cut 2,000 jobs.

McLeodUSA Inc. lost 55 cents to $2.27 after the telephone and data services said its quarterly loss, before items, widened. The company also cut its revenue and cash-flow forecasts for 2001 and 2002.

PMC-Sierra Inc. jumped $3.53 to $36.87 after Standard & Poor's said it would add the communications chipmaker to the closely watched S&P 500 index.

Summer Rally Underway?

The recent market moves could be the summer rally much awaited by the market, Hyman said. But he added he was not looking for the indexes to match their stellar performance in the weeks after they hit a nadir in late March and early April.

"My concern still is third-quarter pre-announcement season," Hyman said, referring to the period straddling the end of each quarter when companies confess disappointing results.

Yet, investors took heart in government data showing an unexpected sharp decline in the weekly number of Americans filing for first-time unemployment benefits. U.S. jobless claims fell sharply for the third straight week last week.

But Wall Street treaded carefully ahead of Friday's all-important jobs data for July, waiting to see more evidence the sluggish economy was bottoming.

Wednesday’s Action

A report on Wednesday confirmed the manufacturing sector has contracted for a full year, the worst performance since the nation's last recession in 1990-1991. That started August on a cautious note, after U.S. companies reported the worst earnings declines in a decade in July — down more than 17 percent from a year ago.

The technology-rich Nasdaq Composite Index ended up 41.25 points, or 2.03 percent, at 2,068.38, off earlier session highs, the blue-chip Dow Jones industrial average slipped 12.80 points, or 0.12 percent, to 10,510.01. The broader Standard & Poor's 500 Index finished up 4.70 points, or 0.39 percent, at 1,215.93.

International Markets Rally on Chip Upgrade

Outside the United States, Japanese stocks soared to their highest close in three weeks, propelled by computer chipmakers following the surge in their U.S. peers in the wake of the Merrill upgrade. Toshiba, Japan's top chipmaker, jumped 7.86 percent in heavy trade, pulling the tech-sensitive Nikkei up 3.68 percent or 439.87 points to 12,399.20.

Merrill, noting the worst may be over for the chip companies, had raised its opinion on the global semiconductor sector and upgraded its recommendations on 12 stocks. Industry fundamentals suggest global demand had hit a trough and supply was stabilizing after strong growth, the brokerage said.

European stock markets were strong by midsession, with telecom equipment makers Alcatel and Nokia pushing the tech sector towards its sixth straight winning session, while lackluster results from Royal Dutch/Shell dented energy shares.

Bank of England Cuts Interest Rates

The Bank of England surprised the market by cutting its key official interest rate by 25 basis points to 5 percent, saying world activity was slower than expected with the outlook also weaker than previously projected. The European Central Bank, however, stayed pat on rates.

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