Updated from 2:26 p.m. EST.
Time to dust off an ancient, yet fitting descriptor of today's market action. The word is "bifurcation," a noun that expresses a split or division. That split was pretty apparent today, as all things tech suffered, while the broader market was largely higher.
Back in the halcyon days of Nasdaq 5000, bifurcation was all the rage, with the risky growth in tech making an upside move at the expense of old-economy stocks and defensive plays. But, according to analysts and industry watchers alike, spending in information technology has slowed, curbing the growth prospects for a wide variety of businesses.
Dow Jones Industrial Average was lately powering higher, while the
Nasdaq Composite Index was sinking. Action has looked like that for most of the day, as traders reacted badly to a spate of negative news about semiconductors and tough words from Wall Street analysts.
was a drag on the Dow and one of the leaders of the Nasdaq selloff. A report from the
Semiconductor Industry Association
showed that growth levels were actually leveling off and that sales had slipped from the previous quarter. That is not good, considering many chip companies need to get rid of already high inventory levels, which are only exacerbated by sliding demand. Essentially, warehouses are piling up with stuff that companies can't sell.
Analysts reacted to the report and bashed the industry.
Credit Suisse First Boston
said that inventory levels had not improved and probably wouldn't until the end of the second quarter.
said that this year would pale in comparison to last year, at least in the first half.
told investors that growth would bottom out in the second quarter, with few near-term catalysts in sight, leaving visibility hazy until March at the earliest. "Until inventory levels are brought down and the macroeconomic situation becomes more clear, we would focus on companies that are near trough or baseline valuations," the Bear wrote.
In other words, the immediate picture looks real bad, the future cannot be predicted and investors should by the stocks with the most attractive valuations. The Bear said it liked
-- but that was nothing more than wishful thinking, since all five companies were much, much lower. The
Philadelphia Stock Exchange Semiconductor Index
lately dropped 4.6%, kicking off a tech selloff.
Some of the biggest names in technology got caught in the crossfire, with the
Morgan Stanley High-Technology 35 Index
, which reports earnings after tomorrow's bell, slid 2.5%.
, which began day one of its three-day analyst meeting, dropped 4.9%.
all sat with large losses.
And so, money poured out of tech and into other areas -- especially petroleum-based stocks, which have tracked higher as the price of crude and natural gas have jumped in recent sessions. Crude futures on the
New York Mercantile Exchange
, despite slipping today, were still above $30 a barrel. The
Philadelphia Stock Exchange Oil Service Index
rose 3.1%, while the
American Stock Exchange Natural Gas Index
rose 1.9%. The bigger, broader oil companies that do not focus on providing services or selling natural gas, were posting more moderate gains.
, one such company and a blue-chip to boot, gained 2.5%.
Like ExxonMobil, 19 of the 30 blue-chips were in the green, overwhelming positivity that offset the healthy Intel loss and stumble in
were some of the best performing stocks.
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What does HMO stand for? Who cares, man? The
Morgan Stanley/American Stock Exchange HMO Index
was up 2.4%.
That said, just look at all that bloodletting in technology. It looks like a pagan paean to evil, with dot-coms, networkers, peripherals and wireless slaughtered by an uncertain future.
American Stock Exchange Networking Index
fell 1.3%, while the
TheStreet.com Internet Sector Index
dropped 1.4%, despite
AOL Time Warner
gaining 3.9% and
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Treasury prices for notes are trading within a narrow range, while the long bond is about half a point higher. Although the
will sell $10 billion to $11 billion each of the 4.75- and 10-year notes and the 30-year bond this week, the 30-year is gathering premium value because of its near-certain removal later this year.
Traders usually go into a selling pattern just before a government Treasury auction to drive down the price of the new notes to be issued. Yields for the notes are up marginally, while those at the longer end are down by about 3 basis points.
The benchmark 10-year
Treasury note lately was down 01/32 to 104 11/32, yielding 5.165%.
In economic news, the
Purchasing Managers' Non-Manufacturing Index
) fell to 50.1 in January from its revised value of 60.1 in December. Readings above 50 denote expansion, so the index is only just barely positive. New orders and order backlogs decreased, and export and employment growth slowed. Meanwhile, imports were unchanged. This data is in line with that of the manufacturing index, which came out last week and indicated a sharp dip into recession territory.
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