Wall Street report: Tuesday close

SHARES leapt as investors put

Financials recovered after the hammering they took last week on fears about the Enron fallout. Shares in the ailing energy trader, which touched 25 cents on Friday, vaulted 46 cents or 115% to 86 cents even as some analysts warned that the stock could go to zero when the company's affairs are reorganised in bankruptcy proceedings.

Some of the renewed optimism was due to $1.5bn in funding provided by Enron's lenders to keep it functioning while it attempts to regroup. Enron's major lenders were big gainers with Citigroup up 92 cents or 2% to $47.83 and JP Morgan Chase rising 67 cents or 1.8% to $37.22.

Techs were on a roll as investors bet that the sector will continue to rally. Cisco Systems, the networking gear maker, set the tone by telling analysts that its business had stabilised and that it was 'cautiously optimistic' about its order flow. Cisco shares gained 66 cents or 3.3% to $20.52. Intel was marked up 82 cents or 2.6% to $32.86 on positive words from UBS Warburg.

Semiconductor equipment maker Novellus leapt $1.80 or 4.8% to $23.77 and Varian jumped $2.23 or 7.2% to $33.41. Mobile phone maker Nokia, under pressure recently on doubts about demand for its products, rebounded $4.24 or 11% to $41.70. Hewlett-Packard recovered $1.09 or 5% to $22.58 and proposed merger partner Compaq added 64 cents or 6.3% to $10.79.

Dell rose 42 cents or 1.5% to $28.08 on positive broker comments. Microsoft erased an early loss to finish ahead $1.23 or 1.9% to $66 on news it would back two of the parties bidding against arch rival AOL Time Warner for control of AT&T's broadband subsidiary.

'The real story is the pretty strong tech sector today,' said Greg Smith, analyst with Prudential Securities. '

But Barton Biggs, chief global market strategist at Morgan Stanley warned investors that it was 'pure madness that the tech bubble is being inflated again.' In a note to clients, the often contrary Biggs said the 'celebration' in techs was 'excessive and premature...I think there is still a lot of 'event' risk out there and I don't believe in the V-shaped recovery in the economy or profits,' he said. 'Most earnings estimates for 2002 are too optimistic for a low-nominal-GDP world.'

Among Dow components, Johnson & Johnson lost $1.08 or 1.9% to $57.23, Merck fell 87 cents or 1.3% to $67.63 and United Technologies recovered all of Monday's drop and more, rising $2 or 3.4% to $60.91. General Electric, down 4.1% on Monday, regained 43 cents on 1.2% to $37.35 as Lehman leapt to its defence following broker comments questioning the strength of some of GE's industrial businesses. Home Depot, the biggest do-it-yourself retailer, tacked on $1.31 or 2.8% to $47.70 as Merrill Lynch added the company to its 'focus' list.