Nasdaq Composite Index
continued to bolster up big gains despite yesterday's
rate hike, even though higher rates -- and the prospect of more hikes to come -- usually hold down growth stocks.
That's because market rates, for now, are doing the exact opposite of what the Fed intended: They're diving, especially on the benchmark (for now) 30-year Treasury. Yesterday's
announcement of scaled-back bond issuance sparked the ongoing rally.
"They're talking about the long bond," Brian Gilmartin, portfolio manager at
Trinity Asset Management
, said of stock traders. "I think has less to do with
the Treasury announcement and more to do with the fact that the market's perception is that the Fed is ahead of inflation."
Lately, the 30-year was up 2 1/32 to 99 28/32, its yield easing to 6.13%. (For more on the fixed-income market, see today's
Lately, the Nasdaq was bouncing 71, or 1.7%, to 4144, with
climbing 15 5/16, or 4.7%, to 343 5/16. Yahoo!'s advances stem from investors confidence in the Internet sector after an upbeat conference call from
last night. Although Amazon missed analyst expectations, the Web giant gave a solid outlook for its future business.
In Nasdaq trading,
was soaring 28, or 14.3%, to 225 3/8 on rumors that the company could be set for a takeover.
Elsewhere in techland,
TheStreet.com Internet Sector
index was jumping 34, or 3.1%, to 1143, with
leading the pack.
For now, the hype continues to surround the big-cap tech names that investors have been swooning over since the fall. "It's large-cap again, names like
," said Gilmartin. "And with Windows 2000 to be launched in 14 days, there is no reason that tech won't do well again this year."
After raking in colossal returns in 1999 from tech, why should investors looked toward anything else? "Today, it's a continuation of the big-cap growth rally that began on Monday when the market made another by the dip bull market recovery from the correction last week," said Brian Belski, chief investment strategist for
George K. Baum
in Kansas City, Mo. "Bull markets are reactive, and right now the market is reacting to the deep corrections, between 15% to 25%, in many of its leading stocks. And those are the same stocks that have rallied back here."
Although tech seems to blow the lid off of any adverse market effects that get in its way, Belski and other investors are skeptical on whether a long-term flight can continue. "Their relative-outperform disparity is not going to be as wide as in 1998 and 1999," he said. "The market was so reliant on big tech stocks then. Now, different areas of the market were working in the fourth quarter and into this year. The theme going forward is broader. With the long bond yield correcting and its price reacting, we're saying we have to buy growth stocks. So for the short term, the momentum will be in growth stocks."
However, Belski points out that a broadening trend will not necessarily put a damper on tech's strong performance. "This doesn't mean that tech won't outperform for the year, it just means that it won't outperform with the same sort of disparity as it did last year," he said.
Dow Jones Industrial Average
wasn't faring as well, falling 23, or 0.2%, to 10,980. The index's cyclicals, such as
, were the biggest draggers, while its tech-heavy components, such as
and Intel, were climbing.
New York Stock Exchange
ADRs were advancing following the news of the
was up 7 to 1416, while the smaller-cap
was gaining 6 to 516.
Lately, breadth was positive on moderate volume.
New York Stock Exchange:
1,857 advancers, 1,086 decliners, 677 million shares. 58 new 52-week highs, 54 new lows.
Nasdaq Stock Market:
2,297 advancers, 1,581 decliners, 1.03 billion shares. 185 new highs, 27 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.