Tech Stocks Rule the Day Again but Raise Questions of Sustainability

Hog. That's exactly what the Nasdaq Composite Index was today: a hog for the spotlight, but mostly a hog for traders' and investors' money, the way it has been seemingly forever.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow -55.53 -0.52% 10,643.63 -7.4% S&P 500 5.13 0.36% 1416.83 -3.6% Nasdaq 122.39 2.81% 4485.63 +10.2% Russell 2000 6.21 1.16% 542.21 +7.4% TSC Internet 30.66 2.67% 1177.50 +2% TSC New Tech 30 17.62 2.68% 675.52 +9.3% BOND CHANGE PRICE YIELD 30-Year Treasury -1 19/32 95 28/32 6.439%

While the Comp rallied, bringing the Russell 2000 and the S&P 500 with it, the blue-chip Dow Jones Industrial Average ended in the red.

The Nasdaq Comp surged 122.39, or 2.8%, to 4485.63, to an all-time high. Helping push the Comp up were solid gains in index giants Cisco (CSCO Quote), Microsoft (MSFT Quote), Intel (INTC Quote), Sun Microsystems (SUNW Quote), MCI WorldCom (WCOM Quote) and Dell (DELL Quote).

Helping scuttle the Dow and hold back the S&P 500 was a poor session in the Treasury market. Treasuries tumbled sharply after an awful auction of 30-year bonds. While the Dow and S&P 500 were weighed down by the weakness in Treasuries, the Comp and the Russell 2000 ignored the selloff in bondland.

The Nasdaq 100, also known as the NDX, rallied 121.52, or 3.1%, to a record 4089.98.

The Russell 2000 rose 6.21, or 1.2%, to 542.21, also an all-time high.

The Dow fell 55.53, or 0.5%, to 10,643.63.

The S&P 500 added 5.13, or 0.4%, to 1416.83.

TheStreet.com Internet Sector index rose 30.66, or 2.7%, to 1177.50, led by Check Point Software Technologies (HKP Quote), which surged 30 1/4 to 180 1/4. Check Point's been on the move as traders in recent days have flocked to Web security concerns like Check Point in light of hacker assaults on big Web sites lately.

But while there was jubilance with the tech sector's climb after yesterday's pause, looking ahead, some market watchers see trouble on the horizon.

Stephen Shobin, chief technical analyst at Lehman Brothers, said there's a minor topping pattern occurring in the NDX and the Russell 2000. However, for right now, there doesn't look like a major top is in the offing for the two gauges, he said. Shobin said a major top won't occur in those gauges unless the NDX takes out the 3348 level and the Russell takes out the 488 level. And right now they're a long way away from there.

As for the Dow and the S&P 500, the technician early this afternoon in an interview that the S&P 500 is where it was last year in July. The Dow, he also noted, is in the same boat as that of the S&P 500.

The only way the S&P 500 and the Dow are going to pick up steam, he said, is only if financials improve. He said that the NYSE Financial Index will have to close above 520 to suggest enough of a resurgence in the fortunes of the S&P 500 and Dow. The NYSE Financial Index dropped 1.7% to 474.37.

Meanwhile in the Treasury market, the 10-year note was down 24/32 to 98 21/32, yielding 6.69%. The 30-year Treasury bond was off 1 19/32 to 95 28/32, putting its yield at 6.439%. (For more on the fixed-income market, see today's Bond Focus .)

Richard McCabe, chief market analyst at Merrill Lynch, pointed out that the Dow and the S&P 500 are 7% to 9% off their all-time highs, which he said might mark a halfway point in their potential ultimate decline. McCabe said those indexes might come down 15% to 20% from their all-time highs before the market's corrective phase is over.

And it could get even worse for the Nasdaq, which may come down even more than 20%, McCabe said, because it is more extended.

McCabe said short-term, the bounce the market has enjoyed lately is probably over. He said he thinks the market could go down into the spring, with the Nasdaq possibly going down even more. After that, he's looking for the market to enjoy a broader advance in the second half of the year, with small caps leading the way.

A rally in oil prices pressured transportation and airline stocks, while helping out oil stocks and oil service issues. The Dow Jones Transportation Average fell 75.05, or 2.9%, to 2475.27, while the American Stock Exchange Airline Index gave up 3.4%.

Conversely, the Chicago Board Options Exchange Oil Index rose 2%, while the Philadelphia Stock Exchange Oil Service Index hopped 4.3%.

TheStreet.com New Tech 30 rose 17.62, or 2.7%, to 675.52. The TSC New Tech 30, unveiled Jan. 5, is a market-cap-weighted index focused on tracking the most scorching part of the market, the magnet for Wall Street's hot money. A list of the index components is available at http://www.thestreet.com/newtech/.

In New York Stock Exchange trading, 1.052 billion shares were exchanged while declining stocks beat advancers 1,797 to 1,225. In Nasdaq Stock Market action 1.809 billion shares traded while winners beat losers 2,189 to 2,002. New 52-week lows beat new highs 249 to 73 on the NYSE while new highs beat new lows 311 to 82 in over-the-counter trading.

Among other indices, the Dow Jones Utility Average slipped 1.34, or 0.4%, to 308.09; the American Stock Exchange Composite Index gained 12.71, or 1.4%, to 892.99.

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For coverage of today's top stocks in the news, see the Company Report, published separately.