Catching up with the economic mood of the country, the major indicators followed by the National Bureau of Economic Research to determine recession and expansion appear to have crested. Real personal income, industrial production, manufacturing, and employment are all pointing south, scaring off technology-sector investors this week.
In one possible leading indicator of a troubled economy, companies in the U.S. and Europe restricted their orders of
routers, prompting CEO John Chambers to warn of an impending recession. The average technology fund we track fell 3.62% for the five trading days ended Thursday, Feb. 8.
One technology investor not was not afraid to jump in and buy on market weakness.
offered $44.6 billion, or $31 a share, to buy
. This unsolicited bid by Microsoft is an attempt to play catch-up to
in Internet advertising. After that news, the value of Yahoo! shares screamed 51% higher this week.
The worst-performing technology fund this week is the
ProFunds Mobile Telecom UltraSector ProFund
, disconnecting shareholders from 11.26% of their money. The standalone mobile phone companies, like
, are off 7.74% & 6.05%, respectively. All these companies are at risk if Google enters the market with game-changing products.
In second place, the
B2B Internet HOLDRs Trust
( BHH) is slowly withering away as its holdings are acquired by bigger companies without being replaced. The only two stocks left in this ETF are
( ARBA), down 8.53% on insider selling, and
Internet Capital Group
, down 4.22% ahead of an expected fourth-quarter loss announcement.
The third-place fund,
Berkshire Focus Fund
, gave up 8.14% overall with losses of 17.02% in
, a Beijing Internet search firm spending heavily to expand into Japan, 10.52% in Google on the buyout offer, and 10.43% in
on weaker demand from consumers.
The best-performing fund this week is the
UltraShort Technology ProShares
, an ETF designed to rise twice as much as the Dow Jones U.S. Technology Index falls each day, which gained 9.15%. Index members fell:
was down 20.13%,
Advanced Micro Devices
declined 13.18%, Google was off 10.52%, and Apple tumbled 10.43%, all contributing to the inverted, positive return.
Internet HOLDRs Trust
( HHH) turned the virtual world into the reality of an 8.27% gain for the period under review. Along with the blowout week from Yahoo!, the fund also advanced on good fourth-quarter earnings from
that beat consensus estimates.
Today, Congress stamped final approval on a $168 billion stimulus package that is expected to be signed into law by President Bush. The number of recipients of rebates was expanded to include senior citizens and disabled veterans, two constituencies likely to cash and spend their checks quickly. The prospect of the rebate may have a positive impact on the market through the second- and third-quarter gross domestic product, which may be good news for economically sensitive technology stocks.
In the case of Apple, the company is hoping that you do your patriotic duty to prop up the economy by spending most of your $600 rebate on the brand new $499 32-gigabyte iPod Touch, or the similarly priced 16-gigabyte iPhone.
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.