Market Update: Dow Powers up More Than 200 Points; Nasdaq Turns Green - TheStreet

Market Update: Dow Powers up More Than 200 Points; Nasdaq Turns Green

<LI>Investors await Florida circuit court judge's ruling, expected later today.</LI><LI>3M star performer on giddy Dow.</LI><LI>Biotech, Internet stocks languish.</LI>
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At midday, the

U.S. Supreme Court

unanimously decided to send the case surrounding the Florida recount back to the

Florida Supreme Court

, which adds more uncertainty to the picture. The high court said that several of the key points in the Florida decision, which extended the deadline to certify election results to include hand-counted ballots, were unclear.

Now the only thing certain is uncertainty. The Florida court must decide how the Supreme Court's action affects their decision. Leon County Circuit Court Judge Sanders Sauls, the Florida judge who was expected to rule on Gore's request for a recount, said that the ruling would be put on hold until he figures out how to handle the Supreme Court's ruling.

Sigh.

Nothing like a little four-week holding pattern in the wake of a super-close Presidential election to make market movements more intriguing, huh?

Well, if your name is

Dow Jones Industrial Average, then you're a pretty happy camper, rallying quite nicely. But if your name is the

Nasdaq Composite Index, then your name is mud. Tech names are getting sacrificed again.

The Dow was lately up more than 200 points, trading right near session highs. The index has been improving since the Supreme Court news hit. This comes pretty close to erasing the Dow's losses in the last two days of last week.

Few of the Dow's components were in the red, the notable exceptions being the Nasdaq's two representatives, Microsoft and Intel. But with 25 of the 30 blue-chips in the green, the Dow shook off those two.

3M

(MMM) - Get Report

was the creme de la creme, adding 34 to the Dow's plus side. But there were other high-quality dairy products in there too. Eight of the blue-chips added 10 points or more to the Dow's upside.

Over on the Comp, the situation has been grim much of the day, though just after 2 p.m. the index turned up into green territory. Before turning up, though, the Nasdaq had been led lower by (what else?) technology.

Dot-coms were the most combustible, with the

TheStreet.com Internet Sector Index

falling 1.5%. You know, the DOT, as the Index is known to its friends, whatever friends it has left nowadays, opened 2000 at 1154.45. And with today's stumble down to within 5 points of a 52-week high, it brings the DOT's 11-month plummet to almost 70%.

Elsewhere in tech, biotechnology suffered. The

Nasdaq Biotechnology Index

fell 1.2%, as some of the biggest names in the industry took sizable hits. Biotechs are seen as an industry favorable to George W. Bush and with the election still uncertain (there's that word again),

Protein Design Labs

(PDLI) - Get Report

,

Sepracor

(SEPR)

and

Alexion Pharmaceuticals

(ALXN) - Get Report

were some of the Nasdaq's worst.

Meanwhile, as more data showing an economic slowdown accumulate, the likelihood grows of a change in the Fed's policy outlook on inflation when it next meets Dec. 19. This is important because a move away from a bias toward concerns about inflation is the first step toward an interest-rate cut. And lower rates help stimulate economic growth by letting consumers and companies borrow money more cheaply.

October new home sales came in this morning at 928,000, a little higher than the expected 910,000, but down from the previous month's 946,000. The report measures the selling rate of new one-family houses and is important because, historically, changes in consumer spending patterns have appeared first in autos and housing.

Sector Watch

Well, let's take a good long look at Clampett country -- petroleum-related stocks.

Natural gassers extended Friday's rally for a second day, as the

American Stock Exchange Natural Gas Index

rose 2.4%, tracking the massive upswing in natural gas prices. At last check, January 2001 natural gas futures on the

New York Mercantile Exchange

were up 14.7%, as traders push the price higher after receiving news that demand for gas heat will increase as colder-than-usual weather seems likely to flood areas where gas heat is most popular.

Other commodity-related sectors were also getting a boost, like gold, which has been good as, well, gold. The

Philadelphia Stock Exchange Gold & Silver Index

was up 3.2%, making this the third-straight day of gains for the index. Goldbugs have been rallying the sector heavily since it hit something of a low on Nov. 17. Since then, the index is up 19.5%.

Forest and paper products in the

Philadelphia Stock Exchange Forest & Paper Products Index

have also been rallying since that time, gaining 9.4%. Today, the trees were up 3.2%. And with trees, oil and gold up, there's no real wonder why the

Morgan Stanley Commodity Related Equity Index

was up 3.1%.

Other non-technology companies were also experiencing a boost as traders continue to discover the wonderful world of revenue and earnings. The

S&P Retail Index

rose 1.5%, while the guys in the

Morgan Stanley Cyclical Index

rose 3.6%. Oh, and another thing. The

S&P Chemical Index

was up 5.9%.

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Bonds/Economy

Treasuries surrendered some the gains they made earlier following the Supreme Court's ruling improving Republican candidate

George W. Bush's

chances of prevailing over Democrat

Al Gore

in the presidential election. At last look, prices were falling.

The bond market views Bush as the less friendly of the two candidates because, to a greater extent than Gore, he would change fiscal policy in ways that would erode projected federal budget surpluses.

Also, news of the ruling boosted blue-chip stock prices, sapping demand for Treasuries.

The 10-year Treasury note was lately down 6/32 to 101 18/32, boosting its yield to 5.538%

Earlier, Treasuries posted moderate gains on investor optimism that the

Fed will lower interest rates in the months ahead.

Today's

Wall Street Journal

reports that the Fed is "leaning heavily toward" changing its assessment of the economy at the

Federal Open Market Committee's next meeting on Dec. 19. Such a move is seen as the first step in a process that could eventually lead the Fed to lower interest rates.

In the

statement it releases after meetings, the FOMC opts for one of three assessments of the economy. Either the risk of rising inflation is paramount, or the risk of slowing growth is paramount, or the two risks are in balance. Since early 1999, the committee has declared inflation the greater risk. It will probably switch to a risks-balanced assessment on Dec. 19, the

Journal

story suggests.

In economic news,

new home sales

(

definition |

chart |

source

) fell 2.6% to 928,000 in October, somewhat less than they were expected to, from 953,000 in September. Economists polled by

Reuters

had forecast a larger drop, to 909,000 on average. Mortgage interest rates have fallen sharply since May, aiding the housing sector.

The

index of leading economic indicators

(

definition |

chart |

source

) fell 0.2% in October, in line with expectations. The index has fallen or been unchanged for seven months in a row, portending slower economic growth in the months ahead.

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