Climb aboard the bandwagon, or wait until the Fed's train pulls into the station? That was the debate going on with investors today with the Nasdaq Composite Index posting its second-straight strong session.
In recent trading, the Nasdaq was up 104.87, or 3%, at 3604.45.
TheStreet.com Internet Sector
index was up 28.09, or 3.4%, at 862.41.
James Deasy, Nasdaq trader with
Credit Suisse First Boston
, said he was seeing short-covering, but also noticed institutions buying stocks.
"It does feel like the worst is over for the short term," he said, though he also said that the lows from last month could still be tested again. Deasy said that Tuesday's Federal Reserve policy meeting remains the wild card, with uncertainty in the marketplace about whether the Fed will raise rates by 25 basis points or 50. And while the amount of the rate increase will be important, Deasy said that people are waiting to see the Fed's bias announcement. That could signal how aggressive the Fed might be in the coming months. If the Fed were to raise rates by 50 basis points, but maintain a tightening bias, investors could run scared.
"The market's in a very nervous state," said Deasy. "There's not a lot of volume. It can react in a pretty significant way either way."
Traditional Internet stocks were among the better performers.
was up 5 3/4, or 4.6%, at 131 1/16;
was up 6 5/16, or 5.4%, at 124 1/16;
was up 7 7/16, or 6%, at 128 5/8; and
was up 4 5/16, or 8%, at 58 5/16. Lycos gains came after
confirmed it was in merger talks with the portal. Terra was up 4 7/8, or 8.6%, at 61 5/8.
And a group of stocks that was punished over the past few days also was on the mend.
, which slid in sympathy with
, was up 15 5/8, or 10.6%, at 163 5/8.
was up 5 23/32, or 8.3%, at 74 25/32.
Business-to-business stocks were back in fashion as well, likely benefiting from some short-covering.
was up 4, or 10.5%, at 42 1/4;
was up 32 1/2, or 6.4%, at 41 3/4; and
was up 8 1/2, or 8.4%, at 109 1/2.
Technical analysts suggested that gains would be extended today, and that the trend could continue into next week. In his daily commentary, Dick Dickson, technical analyst with
Scott & Stringfellow
, wrote that yesterday's rally "was a little frustrating," with breadth and volume positive enough to justify calling for more on the upside, "but not enough to really validate the idea that the market was blasting off from a sustainable low." If sellers regain the upper hand today, Dickson sees the market drifting into Tuesday's meeting. If not, then, the market should rally into the meeting.
"The market still seems to be setting up for a more sustained rally at this stage, but we'll probably have to wait another 3 to 4 days for enough evidence to surface to decide whether the effort succeeds," he wrote.