even after Cisco dropped an earnings bombshell.
The TSE 300 ended in the green on a broad rally. The tech-heavy Nasdaq composite also gained as investors shrugged off earnings warnings by bellwether companies.
And the Dow Jones industrial made positive gains with the help of technology-component companies and health-care stocks.
Tuesday's trading session was marked by a parade of economic numbers and important earnings numbers from market bellwethers, including Cisco Systems.
The inflation numbers continue to support the slowdown scenario. The U.S.
Labor Department reported the consumer-price index climbed just 0.1% in March, down from a 0.3% increase in February. The core index, which excludes volatile food and energy items, rose 0.2%. Both numbers matched expectations.
The Labor Department attributed the slower growth mainly to a decrease in energy costs, which fell 2.1%, after a 0.2% decline in February. Gasoline prices fell 3.8%, the biggest drop since August 2000, while natural-gas prices fell 2.1% and fuel-oil prices declined three percent. Electricity prices, however, rose 0.5%.
Here at home, the Bank of Canada met expectations, trimming its key lending rate by 25 basis points to five percent from 5.25%. The interest-sensitive banks were mixed following the cut, with Bank of Nova Scotia, CIBC and Royal Banks making some gains on Tuesday.
In tech-land, attention turned to Cisco Systems. The giant network equipment maker slated to report third quarter earnings on May 8 said revenues will be 30% lower than those of the previous quarter, and that the current earnings-per-share estimates of 8 U.S. cents might be a target too high to reach. Shares of competitors Nortel Networks and Lucent Technologies were down for the session.
Shares of Intel fell prior to the giant chip maker's earnings report after the market close. The company announced it cut prices on its Pentium 4 processors by as much as 19%, and analysts see more reductions coming this month. Shares of other semiconductor manufacturers such as Micron Technology and Applied Materials also fell.
Among Dow components releasing reports, Eastman Kodak fell after beating expectations but noting that second-quarter results may fall below Street estimates. And Caterpillar lost ground after it missed analysts'
forecasts by a narrow margin. But Johnson & Johnson rose after beating estimates and Philip Morris gained after its earnings numbers edged the Street's expectations.
Canadian aluminium producer Alcan made gains even after reporting lower first-quarter profit. For the quarter ended March 31, net income was $137 million, or 42 cents a share, down from $174 million, or 78 cents a share, a year earlier (figures in U.S. dollars). The consensus had been looking for quarterly profit of 51
cents a share.
Tuesday's trading action was rather encouraging. Up to now, the market was run by short sellers taking advantage of the economic slowdown and investor fears. Now it seems that investors are comfortable with the economic conditions, much to the consternation of short sellers who have been forced to cover positions. One caveat however -- this is still a volatile market and one that will be prone to profit-taking. But with that in mind, things certainly feel as if there is a change afoot.
Dhaliwal is President and chief market strategist of Kirn Dhaliwal Associates. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Dhaliwal nor Kirn Dhaliwal Associates held positions in any securities mentioned in this column, although holdings can change at any time. While Dhaliwal can not provide investment advice or recommendations, he invites your feedback.
