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THE WEEK AHEAD: Markets leave October with momentum

Better-than-expected economic news propelled both the Dow and Nasdaq composite to big gains this week, possibly clearing the way for sustained growth through the end of the year. Also, it doesn't hurt to have the scary month of October behind us.

For the week the Dow Jones industrial average plowed up 109 points to 10,731.76 while the Nasdaq rallied up 91 to close at 2,966.52, an all-time high.

Most of the gains were directly attributed to a stronger-than-expected Gross Domestic Product report for September as well as a mild increase in the Employment Cost Index.

Through in the fact that new home sales fell 12.8 percent in September to an annual rate of 811,000 and it's easy to see why some traders aren't terribly worried about an interest-rate hike before the next millenium.

"It's a very, very euphoric reaction to the labor numbers," said Doug Myers, the vice president of equity trading at Wachovia Securities. "The shark siting is past. Everyone's jumping back in the water."

And they jumped back into Internet stocks, too, as the likes of Yahoo! and AOL made nice gains throughout the week.

Earnings were another piece of the puzzle as companies such as Amazon.com Inc. (Nasdaq: AMZN) and Compaq Computer Corp. (NYSE: CPQ) delivered better-than-expected numbers but less-than-wonderful outlooks.

In Amazon.com's case, the online retailer beat the Street estimate by a couple cents a share, losing $86 million, or 26 cents a share, on sales of $386 million.

But analysts were put off by rising expenses as the company loads up on services and personnel for the holiday shopping season. Turns out, Amazon.com's not in any great hurry to turn a profit and it's starting to take its toll on analysts.

Compaq also topped estimates in its third quarter, raking in $117 million, or 7 cents a share, on sales of $9.2 billion.

While Compaq officials painted a rosy outlook for the fourth quarter and fiscal 2000, Hewlett-Packard made some noise when it warned that sluggish corporate PC sales would cause it to miss analysts' estimates in the fourth quarter.

Considering the mixed messages sent out this week, it's a testament to investor confidence that the Dow and Nasdaq were both able to rally.

Looking ahead to next week, expect the usual banter about interest rates, inflation and Y2K musings.

On the earnings front, one Wall Street's biggest gainers this year will announce its third-quarter results. Qualcomm Inc. (Nasdaq: QCOM) is supposed to earn 88 cents a share.

This stock roared up from a 52-week low of 24 1/2 in December to 222 3/4 on Friday. It also split 2-for-1 in between.

Last quarter, Qualcomm earned $135 million, or 75 cents a share, on sales of $1 billion.

Digital Island Inc. (Nasdaq: ISLD) will also announce its third-quarter results with First Call consensus expecting a loss of 66 cents a share.

And GoTo.com Inc. (Nasdaq: GOTO) will report its second-quarter results. Analysts are looking for a loss of 32 cents a share.