Seasonal cheer on Nasdaq

Everybody having fun: Futures traders surfing Nasdaq's volatile waves

Bargain hunters on Friday saved the US technology stock exchange, Nasdaq, from ending 2000 at a 21 month low.

The Nasdaq Composite Index jumped 177.29 points, or 7.58%, to 2517.28 points during the last trading session before the season break.

US stocks - vital statistics

Nasdaq

Entered year: 4,037

Year high: 5,049 (Mar)

Year low: 2,333 (Dec)

Friday close: 2,517

Dow Jones

Entered year: 11,497

Year high: 11,723(Jan)

Year low: 9,796 (Mar)

Friday close: 10,635

Closing prices only

Hopes of a cut in US interest rates early next year lured investors back as tech-stock buyers, along with a growing belief that the recent sell-off had been overdone.

Gone from the investors' minds was the recent flurry of earnings warnings from some of the biggest high-tech companies in the world.

Instead, the hopes of reduced borrowing costs injected Christmas cheers.

A laugh a minute

Some particularly optimistic dealers were even laughing at how the people who went on holiday early would regret having missed out on this great buying-opportunity.

All together now: traders having a ball

High technology shares such as Cisco Systems and chipmaker Intel lifted the index, as did the computer maker Sun Microsystems.

It was a remarkable rise from Wednesday's year low of 2,332.78, and traders let the world know when they hit the town in New York on Friday.

But even they were not sure whether the recovery of technology stocks' value could last.

After all, the composite still stands more than 50% below its year high, reached in March.

"This is our brief Santa Claus rally," said Scott Bleier, chief investment strategist at New York-based brokerage Prime Charter Ltd.

"We think this is more of a bounce from the hammering we've gotten up to Wednesday."

Blue chips

The Dow Jones industrial average, which measures performance on a broader range of blue chip firms, rose 148 points or 1.4% to 10,635 points. The index had entered 2000 at 11,497.12.

Traders seemed confident on Friday that in the New Year, the Fed's response to the slowdown in the country's economic growth would be a rate cut.

The Federal Reserve, the US central bank, on Tuesday decided to freeze interest rates at 6.5%, despite a series of economic data indicating economic weakness, and rash of profits warnings from US companies.