Last week's feel-good economic data gave set the stage for a Wall Street pep rally that pumped the Nasdaq up almost 19% in four days. When the game began today, investors continued to implement the once-winning plays used before the correction days, rotating money out of safety zone sectors like financials and consumer staples and into tech. But many bulls remembered the agony of defeat and decided sit out and scale back on their wagers before getting roughed up again.
With volatility on their minds, investors were skeptical that good news from economic data could stop the
Fed from taking rates higher at the next scheduled
Federal Open Market Committee meeting, June 28. Although the numbers did indicating the
Greenspan plan was having some effect, not everyone was confident that it was a reason to jump head-first into the market again.
"This morning's selloff was on the basis that people felt that maybe we got ahead of ourselves," said Matt Johnson, head of Nasdaq trading at
, referring to last week's 19% pop in the Nasdaq Composite Index. "If anything comes out of the correction, people are remaining more disciplined about what they're buying. We're two weeks before preannouncement season and they want to make sure they know the story before going in and buying again."
Lately, the Nasdaq remained up 16, or 0.4%, to 3830, with
said it abandoned plans to use Qualcomm's CDMA technology.
In Nasdaq trading, biotech stocks were lifting.
Protein Design Labs
taking the lead. This morning,
upgraded shares of
Human Genome Sciences
Nasdaq Biotech Index
was advancing 2.9%.
But stocks remained mixed, as nervous investors contemplated the market's uncertainty in the face of a slowing economy. "We're seeing some profit-taking after last week's solid gains, and the absence of substantial economic news still has people guessing," said Peter Cardillio, chief strategist at
, referring to the future of rates.
Elsewhere in techland,
TheStreet.com Internet Sector
index was sliding 15, or 1.6%, to 931, with
among the leaders on the downside.
Advanced Micro Devices
was fired up almost 4.2% after saying it would unveil a new chip that has
designing PCs accordingly.
Dow Jones Industrial Average was coming back off of its session lows, mounting 37, or 0.4%, to 10,832, with tech components H-P and IBM keeping it afloat. H-P was surging 10.4%, while IBM was up 3.9%.
Although the financials managed to scale back some of their early-morning losses, the sector's stocks continued to suffer with
falling 3.4% and
American Stock Exchange Broker/Dealer Index
was down 2% and the
Philadelphia Stock Exchange/KBW Bank Index
was off 3%.
The drug sector was also declining, with the
American Stock Exchange Pharmaceutical Index
"Last week's rally was about 40% based on evidence and 60% based on hope," said Jim Weiss, deputy chief investment officer of
State Street Research
. "The big negative of rising rates appears to be off the table, and now were seeing the erosion of names that had been the beneficiary of the tech decline -- consumer staples, financials and health care -- and those flows are exactly reversing themselves."
Breadth was mixed and volume was tepid.
New York Stock Exchange:
1,236 advancers, 1,578 decliners, 507 million shares. 37 new 52-week highs, 19 new lows.
Nasdaq Stock Market:
2,100 advancers, 1,791 decliners, 916 million shares. 59 new highs, 42 new lows.
For a look at stocks in the midsession news, see Stocks to Watch, published separately.