Big-Cap Tech Stocks Lead Rebound but Dow Doesn't Come Along

The rebound from yesterday's near-scraping of Nasdaq 3000 continues, with Oracle, Intel and Cisco in the lead.
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The market looked a little healthier this morning after yesterday afternoon's sprint inspired a much-needed energy boost. Technology stocks were leading the charge, while the broader market was mixed.

"It's kind of a continuation of the second half of yesterday," said Bill Schneider, head of U.S. equity block trading at

UBS Warburg

, characterizing the recent action as a "return to normalcy rather than the roller-coaster moves" experienced of late. Speaking of scary rides, the

Nasdaq Composite Index had shed 13% in the past week alone and yesterday came dangerously close to breaking through the key 3000 support level before rebounding more than 100 points. Lately the tech-laden measure was up 73, or 2.2%, to 3343, slipping off its intraday high. "There's a better feeling in the pit of your stomach," said Schneider.

The

Dow Jones Industrial Average was lately in the red, down 35, or 0.3%, to 10,500. After a brave attempt to follow through on yesterday's strength, the blue-chip measure lost its nerve about a half-hour into trading. The heaviest drags on the Dow were

Microsoft

(MSFT) - Get Report

and

3M

(MMM) - Get Report

which together accounted for more than 27 points worth on the downside.

The

S&P 500 was up 9, or 0.6%, to 1408, along with the small-cap

Russell 2000, up 7, or 1.5%, to 469.

TheStreet.com Internet Sector

index was on the plus side, up 14, or 1.8%, to 785, despite the weight of

Yahoo!

(YHOO)

, which was down more than 4 points.

Technology bellwethers were looking very solid.

Cisco

(CSCO) - Get Report

was up 4.2%,

Oracle

(ORCL) - Get Report

was rising 9.3% and chip giant

Intel

(INTC) - Get Report

was up 1.9%. The

Nasdaq 100

, which is mainly composed of the heavyweight tech stocks, was up 2.4%.

"This is another nice move from the growth stocks, within tech in particular," said one market strategist whose firm will not let him be quoted by name. He noted the focus on solid companies with quantifiable revenues and earnings, especially within areas such as the semiconductor sector. "You're starting to see a subtle shift to the traditional leaders start coming back." Though he admits he thinks at least some of it is probably being driven by technically oversold trading, he thinks it is also a signal of a return to fundamentals.

Semiconductor stocks were looking sharp today, with the

Philadelphia Stock Exchange Semiconductor Index

gaining 3.8%.

Texas Instruments

(TXN) - Get Report

had tacked on 5.9% while

Micron Technology

(MU) - Get Report

was motoring up 10.7%. The SOX is bouncing back after Tuesday setting a new closing low for the year, below its April 14 low.

Transportation stocks were taking a breather after burning up the track yesterday in the wake of

United Airlines

parent

UAL's

(UAL) - Get Report

proposed $4.3 billion acquisition of

US Airways

(U) - Get Report

. The

Dow Jones Transportation Average

was off 2.9%.

Amid a flurry of speculation about the potential effects of the merger, a number of research firms cut ratings on UAL, US Airways and

American Airlines

parent

AMR

(AMR)

, the latter of which some industry analysts view as being in an awkward position right now. UAL was down a fraction after taking a beating yesterday, while US Airways was giving back 6.6% of yesterday's whopping gains. AMR was shedding 5.4%. The

American Stock Exchange Airline Index

was down 2.8%.

This morning's

economic news of revised first-quarter

gross domestic product

was basically a nonevent. The U.S. economy kept growing at a brisk 5.4% annual rate in the first quarter, with little or no sign of inflation.

Ho-hummm

. Lately the 10-year Treasury was up 7/32 to 100 12/32, its yield easing to 6.45%.

Despite the short-term upside in the market, many investors are still keeping a wary eye on stocks. "Investors are not ready to jump back in yet," said the market strategist. "People are going to take advantage of the swings. Longer-term, is this the big rally or the big bottom? No one knows."

Market Internals

Breadth was positive, particularly on the Nasdaq, on moderate-to-light volume.

New York Stock Exchange:

1,460 advancers, 1,264 decliners, 512 million shares. 27 new 52-week highs, 36 new lows.

Nasdaq Stock Market:

2,192 advancers, 1,529 decliners, 804 million shares. 24 new highs, 79 new lows.

For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.