Tech Rebound Boosts Nasdaq Above 3000; Web Shares Take Hit from Slowing Advertising
ANNOUNCER: MONEYLINE continues. Here again, Willow Bay.</s>BAY: In tonight's headlines, an election and an entire nation on hold, as the U.S. Supreme Court considers what to do about the Florida recount. We'll look at the legal challenges for the high court. And a rebound in tech stocks helps the Nasdaq regain its footing above the 3,000 level for the first time in nearly a month. Plus, some new-economy names failed to join the upswing. Web shares take a hit after more signs that the advertising gravy train may have run out of steam. But first, more on tonight's top story: The U.S. Supreme Court hears arguments on the Florida electoral showdown, and the nation gets a hint how the justices might view the recount ordered by the Florida Supreme Court. Our guest tonight spent the morning at today's hearing, Richard Lazarus, director of the Supreme Court institute at Georgetown University. Richard, welcome to</s>MONEYLINE. RICHARD LAZARUS, GEORGETOWN UNIVERSITY: Thank you very much.</s>BAY: After spending the morning hearing these arguments, did this appear to be a court bitterly divide among partisan lines?</s>LAZARUS: No, not really in the same way the court has been before. I think the court as an institution accomplished a lot today. Arguments before the court on Friday December 1st and the vote, sharply divided vote, on the stay application this past Saturday had cast the court in a very poor light. They had seemed to be almost as partisan and political in their division as the Bush and Gore campaigns themselves. But today during the oral argument, the court seemed to be striving to send a very different message. And they asked in a very bipartisan fashion tough questions of both sides, with Justice Kennedy taking the lead and right at the outset asking very tough questions of the counsel for Governor Bush, and Justice Souter in turn asking very tough questions of the counsel for the vice president. I think the court was trying to send a message that we're approaching this in a very thoughtful and bipartisan fashion.</s>BAY: So, that's interesting because you think that the court really decided this through beforehand to appear not to be divided along partisan lines and to appear unified, or at least balanced, in their questioning?</s>LAZARUS: I think balance in their questioning, it doesn't mean at all that the court is going to hand down a unanimous decision here. But I think they wanted very much to let the public know that they were not approaching this case as a political case with partisans on either side.</s>BAY: Now you mentioned Justice Kennedy a moment ago. Everyone of course was looking for signs that Justice Kennedy or O'Connor were leaning in one direction or another. Did you get any sense of that?</s>LAZARUS: Well, I think I did get some sense of it. Starting the day, I think everyone's sense was that the vice president was behind and behind by a lot, had an uphill battle. I think at the end of the day, he's still behind. But he's further ahead than he was at the beginning. He gained some ground. One can at least imagine now a possible majority view in favor of the vice president.</s>BAY: And, Richard, what leads you, what sorts of questioning lead you to believe that Vice President Gore at least has a chance?</s>LAZARUS: Well, I'd say he at least has a chance because there was a -- sorry -- concerted effort by Justice Souter to try to fashion a majority along the court, reaching out to Justice Kennedy, Justice O'Connor, and I believe also to Chief Justice Rehnquist, to suggest the possibility of a remand here allowing the a recount reversing the Florida Supreme Court on some limited grounds but also allowing a recount to proceed as the vice president wants.</s>BAY: Richard, when are we likely to hear from the Supreme Court?</s>LAZARUS: That's a great question. Normally, the Supreme Court takes between 60 and 270 days to decide its cases. Here I think we'll probably hear something from the court tomorrow. Tomorrow is December 12th, and that is a significant day in terms of the implications of the need to certify some electors from the state of Florida. It's not a drop-dead date. It's not end of the world if the court doesn't. But I think there's a lot of expectation that the court will try to decide and give some indication of its ruling by tomorrow, if not certainly pretty soon thereafter.</s>BAY: Of course we're all waiting eagerly. Richard Lazarus, thanks for your insight into the court today.</s>LAZARUS: Thank you.</s>BAY: Well, as Washington waited on the high court, Wall Street today turned in a solid showing. Investors drove the Nasdaq back above 3,000 for the first time since November 17, betting that beaten- down tech stocks have seen their worst days. The Nasdaq made steady gains through the day, ending nearly 98 points higher, more than 3 percent, to 3,015. About 2.4 billion shares changed hands. A different story for the blue-chip average, which gave back most of its gains late in the session to close up only 12 points, to just under 10,726. Volume was more than 1.2 billion shares. In the broader market, the S&P; 500 gained 10 points. But the Treasury market gave back some of its recent rally. The 10-year fell nearly half a point and the 30-year lost more than half a point. It's been a turbulent ride for the markets since Election Day, the Dow down 2 percent and the Nasdaq, despite last week's recovery, still off 11 percent. Greg Clarkin has been keeping track of the uncertain mood on Wall Street, and he joins us now for an update -- Greg.</s>GREG CLARKIN, CNN CORRESPONDENT: And, Willow, investors really have been feeling pretty good about things lately. After all, many expect interest rates will ease in the coming months, and the flurry of profit warnings has ended at least for the time being. Now all that put Wall Street in the mood to rally today.</s>CLARKIN (voice-over): Wall Street went about its business with one eye on Washington. Tech stocks posted another rally, even as the Supreme Court again heard arguments from the warring parties in the presidential race. The Nasdaq gained more than 3 percent, sending the composite to its first close above 3,000 in three weeks.</s>ANGEL MATA, LEGG MASON: I'm just really encouraged as to what I'm seeing out there. I'm seeing a lot of money being poured into the technology stocks, which have definitely been undervalued. And I think what you're starting to see is a change in the psychology of the market, one from we have to sell the rallies because they're going to go down to, we have to buy the dips because they're going to go higher.</s>CLARKIN: Most big-name tech stocks did well, but Sun Microsystems was an exception. It fell again amid fears of a slowdown in growth. But the big three: Microsoft, Intel and Cisco all gained. Home improvement chain Lowe's said the slowing economy will cause it to miss profit estimates. But Lowe's shares withstood the news and gained. But competitor Home Depot dragged on the Dow, as did Wal- Mart, after it said weekend sales were lackluster. The financials were strong. J.P. Morgan posted a solid gain. Some analysts say the markets are poised to rally, and they credit Federal Reserve Chairman Alan Greenspan's recent hints at an interest rate cut as setting the stage.</s>CHRIS WOLFE, J.P. MORGAN: We think investors have to be happy about Chairman Greenspan's comments last week and have to be happy about what is likely to be a bias shift next Tuesday. And we think they have to be happy about, really, the continuation of the monetary policy loosening. Looking into the first quarter of next year, we fully expect at least two rate cuts in the first quarter.</s>CLARKIN: Now many analysts say the combination of an end to the political fighting and a lower interest rate environment could spark a rally. But others are more cautious. They're still betting investors will be battered by profit warnings and weak earnings as the economy continues to slow -- Willow.</s>BAY: So largely upbeat but still not ready to throw caution to the wind at all.</s>CLARKIN: Exactly, there's a good dose of cautiousness out there as we approach the end of the year.</s>BAY: Greg Clarkin, thanks.</s>CLARKIN: Sure.</s>BAY: So can the markets keep up the pace of this recent recovery? Terry Keenan takes a look "Behind the Numbers" to what has some investors in a holiday mood -- Terry.</s>TERRY KEENAN, CNN CORRESPONDENT: Willow, that's right. With Christmas just two weeks away, Wall Street strategists were climbing all over each other today calling for a Santa Claus rally that will erase some of the pain that investors have endured this year. In fact, no fewer than three major strategists came out today with bullish comments about the rest of this year and next, fueling a growing perception on Wall Street that the Nasdaq may have really hit bottom at just over 2,500 November 30th. Among those positively gushing about the market, Ed Kerschner, the perpetually bullish strategist at UBS Warburg. Ultra bullish this year, Kerschner now says next year may be one of the five most attractive years in 20 years for stocks, and he sees the S&P; 500 up 24 percent by the end of 2001. Joining him in the bullish camp today, Tom Galvin at CS First Boston. Galvin was the most aggressive strategist on the Street about this year's market. He originally predicted the S&P; 500 would hit 1,680. Tonight it is at 1,380, down about 20 percent from that forecast. But he hasn't been reformed. In comments out today Galvin cites a positive interest rate environment going into next year as the main reason that he thinks the S&P; 500 will rally 16 percent over the next 12 months. But the most surprising bull to come out of the woodwork today was Barton Biggs, the curmudgeonly strategist at Morgan Stanley Dean Witter. Biggs says he now believes that the market is oversold and calls for a playable rally that would take the Nasdaq back to 3,500, that's up about 16 percent from where we're sitting tonight. But amid all this happy talk, one strategist today reiterated his very cautious and so far very correct assessment of this market. Doug Cliggott at J.P. Morgan was the only one of a dozen Wall Street gurus to call a down market this year. And he isn't changing his negative tone about next year. Cliggott today lowered his earnings estimates for 2001. He's bracing for a profits recession next year and says he would underrate the consumer stocks and avoid technology. Fair value on the S&P; 500 by the end of next year, according to Cliggott is just 1,429, or 3.5 percent from where we are this evening. So some very divided opinions on this market, but the bulls are certainly in the majority -- Willow.</s>BAY: Terry, divided opinions, we're getting used to that. Terry Keenan, thanks. Coming up, the dot.com dominoes continue to fall. More fears over slowing ad sales take a bite out of Yahoo! and DoubleClick. We'll have the latest. Plus, it's not your father's stock exchange. The New York Stock Exchange hit the airwaves with a new TV campaign, going head-to-head with it's arch rival: the Nasdaq. We'll be right back.