Nasdaq Rises 20.33 to 4,169.22; Yahoo! Beats Earnings Expectations
STUART VARNEY, CNN ANCHOR: Tonight on MONEYLINE, investors frazzled the day after an extraordinary session on Wall Street. But if they were looking for a convincing rebound, it didn't happen.</s>WILLOW BAY, CNN ANCHOR: Is the worst over for techs? That could depend, in part, on a crucial earnings report from Yahoo!, the first dot.com to post first-quarter profits.</s>VARNEY: Techs and the Internet -- the buzz at the White House today: President Clinton hosts the powerbrokers of the new economy, including the biggest economic guru of them all.</s>BAY: And gender warfare in the workplace -- feminist Shere Hite on her controversial new book, "Sex and Business."</s>ANNOUNCER: This is the MONEYLINE NEWS HOUR. Reporting tonight from New York, Stuart Varney and Willow Bay.</s>BAY: Good evening. Well, the day after not as memorable.</s>VARNEY: But certainly volatile, as investors braved through yet another choppy day of trading. The session was anything but cheery. Investors started on shaky ground, after yesterday's volatile swings which took the Dow and the Nasdaq down more than 500 points during the session. Add to that a White House conference with some of Wall Street's biggest players today and investors had plenty to keep an eye on.</s>BAY: By 12:00, the Dow industrials were off more than 160 points and ended up closing at 11033, down 130 points on the day. Now to the Nasdaq, investors there were holding their breath at the open. The index plunged 140 points in the first few minutes of trading, but the action changed course and the Nasdaq jumped more than 137 points. By the close, it was up just 20. Rhonda Schaffler has more on the volatility in tonight's STREET SWEEP report.</s>RHONDA SCHAFFLER, CNN CORRESPONDENT (voice-over): Another day of selling on the Big Board a bit more cautious than yesterday's chaos. But by the close, a better than 130-point drop. Investors drifted back to technology stocks on the Nasdaq, seeing some bargains lying in the dust of Tuesday's debacle.</s>TERENCE GABRIEL, IDEA GLOBAL.COM: We've got a lot investors out there who are nervous here. There's been margin calls perhaps that have been pressuring some of these high-flying stocks. But we've also seen some dramatic recoveries off lows and some deep declines in some stocks that make them look relatively attractive.</s>SCHAFFLER: Biotechs led the Nasdaq's recovery. Amgen, Genome Therapeutics and Biogen all closed slightly higher, as did Oracle. But Microsoft shares continued to decline, investors patience apparently wearing thin, even with the company and the government agreeing today to speed up proceedings in the antitrust trial. Techs also rebounded strongly on the Big Board. Hewlett-Packard, IBM and Texas Instruments all closed higher, while Micron Technology surged 14 1/2. The market took some comfort from comments out of White House conference on the new economy. Goldman Sachs' strategist Abby Joseph Cohen said she remains -- quote -- "enthusiastic" about stocks. And Fed Chairman Alan Greenspan made it clear the Fed is not targeting stock prices with its rate hikes. Back on Wall Street, traders turned their attention to the prospects of corporate profits. Shares of Coca-Cola took a beating, after the company lowered its growth rates, prompting Goldman Sachs to trim earnings estimates. But Sears issued a rosy forecast. The country's number-two retailer said it anticipates a record first quarter earnings report. Shares of Sears closed up more than 7, and Advanced Micro Devices shares ended higher by more than $6. The chip maker saying it excepts to report record first-quarter sales.</s>SCHAFFLER: Although today looked like a return to the versions of Dow and Nasdaq of old, market watchers say the real test will come with the earning season. Salomon Smith Barney's Marshall Acuff said earnings will be a test to the old and new economy stocks as profit growth is expected to be strongest for tech firms -- Stuart.</s>VARNEY: All right, we see first those numbers next week, I think, right?</s>SCHAFFLER: Correct.</s>VARNEY: Fair enough, Rhonda Schaffler at the Big Board. Thanks, Rhonda.</s>BAY: Today's small bounce for tech stocks still leaves the Nasdaq off more than 17 percent from its record high set just last month, deep in a correction. Charles Molineaux is standing by with more on today's action from the Nasdaq marketsite -- Charles.</s>CHARLES MOLINEAUX, CNN CORRESPONDENT: That's right, Willow. And strategist say it's much too soon to can close the book on yesterday's "hellacious" swing by technology stocks. But today's bouncy ride over a range of 280 points with a positive close was encouraging. The Nasdaq composite plummeted at the outset, as strategists blamed this on overseas investors following up yesterday's wild ride. But a tech rally kicked in, took the composite up, then lost steam then inched up to a 20 point gain to close. A return is under way to some tech names, those with good fundamentals and earnings expectations. Internet stocks gained on the day. Web security company Verisign surged 8.6 percent, and of course we have news from an Internet bellwether, Web portal Yahoo!. Yahoo! Lost ground, 1 percent during the day, then after the close reported earning better than expected and revenues much better. And as they have done before, investors sold on the good news, and the stock is now down another $5 and has been in after-hours trading. And speaking of earnings, chip stocks rallied after, as we heard, Big Board company Advanced Micro Devices predicted good results, so for that matter did Microchip, which was up by 12 1/2 percent. Rambus and Applied Materials surged for a second day, after a series of positive analyst comments about chip equipment makers. Again, this was a selective rally. Stocks that went up only slightly outnumbered those that went down. Computer stocks, financials and telecoms all fell. But biotechs climbed nicely out of the basement, up 6 percent, and we saw big-cap biotech Biogen was up 9.8 percent. And Sequinome (ph) saw one of the biggest gains on the Nasdaq today, up almost 39 percent. Now market watchers say tech stocks may yet retest the lows of yesterday's sell-off, but today's Nasdaq performance shows investors are ready to buy tech. Now investors are looking ahead to the latest employment report from the Labor Department. That's coming up on a Friday, and yes, we have more tech earning news due out next week. A lot of reports are on the plate -- Stuart, Willow.</s>BAY: Charles Molineaux, at the Nasdaq marketsite, thank you.</s>VARNEY: Now one tech stock that could drive tomorrow's trading is Yahoo!. After the bell, the Web giant ignited the first-quarter reporting season with blockbuster results, Yahoo! reporting better- than-expected profits, fueled by especially strong revenues. Bruce Francis crunched the numbers for us, and he has this report.</s>BRUCE FRANCIS, CNN CORRESPONDENT (voice-over): Yahoo! raked in the revenues during the first quarter, $228 million in all, at a time of year that's traditionally slow for advertising, which provides the bulk of Yahoo!'s sales. As for profits, Yahoo!'s net income soared 257 percent to $63 million. Net revenue grew 120 percent to $228 million. That enabled Yahoo! to report profits of 10 cents a share, 1 penny ahead of expectations.</s>MICHAEL GRAHAM, ROBERTSON STEPHENS: I think it's really impressive that Yahoo! was able to post 228 million in revenue. That's 13 percent sequential growth. That's the same growth in revenue that they posted sequentially Q4 over or Q1 -- or Q1 over Q4 last year. So I think it's a pretty amazing number from Yahoo!.</s>FRANCIS: Yahoo! credited expansion on a number of fronts, from opening a service in Argentina to expanding content on wireless phones. Yahoo! also hinted at good news to come, telling analyst to crank up estimates of operating margins by 2 percentage points. On the wild wild Web, Yahoo!'s, two main nonfinancial barometers, registered users and page views, have been strong and steady, growing more than 166 percent in the past year, a trait that's much admired on the street. Good news couldn't be more welcome to the Internet investors. Yahoo!'s stock is down 34 percent from its peak. Investors have been preoccupied with stories about the wobbly financials of companies such as Peapod, CDNow and DrKoop.com.</s>ARNIE BERMAN, WIT SOUNDVIEW: Yahoo! couldn't be more different than those companies. It has more popularity, more traffic than anybody else, and at this point, doesn't really have a problem with cash burn; it's got a problem with huge cashflow. It's really a cash machine.</s>FRANCIS: Huge, indeed. Yahoo! now has more than a billion dollars of cash on the books, enviable, even by old economy standards. The company says it's looking forward to coming Web shakeout so it can gobble up some promising properties. And as we mentioned, after-hours trading, Yahoo! is down now more than $4.50, but as Charles said, that's not uncommon, this trading pattern.</s>VARNEY: Did I get this right? The cash on hand has gone from $240 million to $1.1 billion?</s>FRANCIS: A huge jump. It really is a cash cow now. And they intend to put this to work, for expanding the business, perhaps even for acquisitions. All right, Bruce Francis, thanks very much.</s>VARNEY: Now another person listening to tonight's Yahoo! conference call, Internet analyst Lise Buyer of CS First Boston, and she's going to join us later with her outlook for the Internet giants and a good deal more.</s>BAY: Coming up on MONEYLINE, the street lights up the hot donuts sign for Krispy Kreme's IPO, but barely throws Met Life a bone.</s>VARNEY: Plus, Nabisco responds to a sweeter offer from financier Carl Icahn. The question is, will the company bite on this one?</s>BAY: And from courtroom opponent to honored guest, Bill Gates visits the White House as the Microsoft trial goes to the fast track.