Many Md. stocks rise on rate cut

Sun-Bloomberg index gains 2.78% to 206.96 points

`Move is ... really bullish'

Improvement also tied to better news in technology sector

April 19, 2001|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

The Federal Reserve's surprise cut in interest rates and some positive news out of the technology sector pushed the index of Maryland's leading public companies up nearly 3 percent yesterday.

The Sun-Bloomberg Maryland index rose 5.6 points to 206.96, a 2.78 percent increase. At one point in the afternoon the index reached 209.41.

The upswing began shortly after the Federal Reserve announced yesterday morning that, for the fourth time this year, it would cut a key rate by half a percentage point.

The federal funds rate - what banks charge each other for overnight loans and an indicator of where rates are headed - was trimmed to 4.5 percent. The more symbolic discount rate also was cut a half-point to 4 percent.

"Lower rates are just so positive for the market," said Mitchell Peremel, vice president of Peremel & Co., a Baltimore discount brokerage. "Even though the economy is weak, this move is just really bullish and a sign that the economy is trying to bottom and the market looks like it has bottomed."

Stocks also rallied on more positive news from the technology companies that might indicate the beaten sector is turning a corner, some market experts said.

Intel Corp. this week reported higher sales than the reduced estimates the company had warned about earlier. Texas Instruments Inc. also announced yesterday that its first-quarter earnings, excluding certain expenses, would exceed analysts' predictions.

All three major stock indexes got a boost yesterday.

The biggest percentage gain occurred on the technology-laden Nasdaq composite index, which rose 156.22 points to 2,079.44 for an 8.12 percent jump.

The Dow Jones industrial average, composed of 30 blue-chip stocks, rose 399.10 points, or 3.91 percent, to 10,615.83. The broader Standard & Poor's 500 Index ended up 46.35 points to 1,238.16, a 3.89 percent increase.

"This is a very broad rally. There is nothing hidden in the Maryland stocks. They are basically participating in the rally we are seeing here today," said Angel Mata, senior vice president of equity trading at Legg Mason Inc. in Baltimore.

Human Genome Sciences Inc. in Rockville, a developer of gene-based drugs, was the biggest gainer on the index, rising $5.39, or 10 percent, to $59.16 per share.

It was followed by Ciena Corp., a Linthicum telecommunications equipment maker, which rose $4.97, or 9.4 percent, to $58.06 per share.

Manugistics Group Inc. of Rockville, which sells software to help manufacturers manage supply chains, rose $4.86, or 19.3 percent, to $30.06.

Not all stocks shared in the rally.

Tessco Technologies Inc. of Hunt Valley dropped $2.85 to $12.05 per share, a 19 percent decrease; and Sandy Spring Bancorp Inc. of Olney fell $1.44, or 4.7 percent, to $29.25.

The state's two largest power companies, Constellation Energy Group and Allegheny Energy Inc., both lost ground. Baltimore-based Constellation fell $1.16 to $46.24 per share. Allegheny, based in Hagerstown, lost 78 cents a share to close at $47.72.

Market experts say that utility and drug stocks tend to be havens for investors in a weak economy, but stocks in those sectors fell back despite yesterday's rally.

"Maybe this is a sign that investors are becoming more bullish on some of the names that faltered last year and are willing to move away from some of the safe havens," said Patrick Buttarazzi, associate vice president with Prudential Securities in Baltimore.

Still, the rally did little to pull the Maryland index out of bear market territory, generally defined as a 20 percent drop. The index is down about 40 percent from its closing high of 347.07 on March 6, 2000.

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