Market Update: Dow Remains Positive, Nasdaq Sours Some in Late-Day Trading
The first day back after a holiday weekend can be kind of rough. Especially Thanksgiving, with all that leftover food and turkey leaving people groggy. But with just two hours left in the trading day, the
Dow Jones Industrial Average was positive, albeit off session highs. Volume was slow, but blue-chip traders were making a play to go home fat and happy. The
Nasdaq Composite Index was having a more conflicted day
The Dow was lately posting near-triple-digit gains, with the majority of its blue-chips in the green. Retailers were up in a big way, due in no small part to the time of year, since the day after Thanksgiving is, as we've been told over and over again,
the biggest shopping day of the year
.
Wal-Mart
(WMT) - Get Report
and
Home Depot
(HD) - Get Report
were a dynamic duo, adding a combined 31 points to the Dow's plus side. Drug stocks were at record highs for the year.
As a whole, other retailers were following Wal-Mart's lead. The
S&P Retail Index
, which collects the biggest retailers and tracks them as an industry, was up 5%. And
Merck
(MRK) - Get Report
, less than a buck from its 52-week-high, was leading the pharmaceuticals on the upside.
J.P. Morgan
(JPM) - Get Report
led the brokers, adding 19.7 points to the Dow gain. For those of you with the play-at-home version, the
American Stock Exchange Pharmaceutical Index
was up 3%.
Meantime, the Comp was lately down modestly after spending much of the day just above the flatline. Today's erratic movement reflected a pitched battle within the Comp as some of the biggest semiconductor names weighed down the index while other issues advanced strongly.
On the plus side, battered biotechnology companies advanced. The
American Stock Exchange Biotechnology Index
rose 4.1%. The best names in the sector weren't the big fish. The small fry sizzled.
IDEC Pharmaceuticals
(IDEC)
and
Myriad Genetics
(MYGN) - Get Report
were two of the best names on the Nasdaq, while other biotech-related companies like
Lion Bioscience AG
(LEON)
,
Sepracor
(SEPR)
and
Andrx
(ADRX)
sat with better-than-$5 gains.
But (and it's a big ol' "but")...
Chipmakers got killed.
Slowing sales continue to plague companies in the market, and when
Wit Soundview
downgraded
Philadelphia Stock Exchange Semiconductor Index
component
Ariba
(ARBA)
, the SOX's fate was sealed for the day. Other analyst actions followed, and the mudslide began.
Cypress Semiconductor
(CY) - Get Report
, a smaller, less-talked-about chipmaker with a market cap just south of $4 billion (by comparison, Ariba's is almost $19 billion), got cut by
Prudential Securities
to accumulate from strong buy, with a new price target of $42, down from $75. And although the company isn't as widely held, the news that Prudential cut it on fears of an earnings slowdown was enough to rile the entire industry.
Lowered earnings forecasts at
Lehman Brothers
didn't help matters any. Lehman lowered its forecasts for both
Xilinx
(XLNX) - Get Report
and
Altera
(ALTR) - Get Report
, citing slower demand in November. Lehman believes that neither of the semiconductor manufacturers will meet their 12% quarter-over-quarter growth targets for the fourth quarter.
And shares of communications semiconductor manufacturer
Broadcom
(BRCM)
fell 16.8%, on the back of a downgrade from
Salomon Smith Barney
. Citing "signs of flattening orders in Broadcom's supply chain," the investment house cut its 12-month price for the company.
Net result -- the SOX fell 6.4%.
Sector Watch
Well, the holiday season is upon us and you know what that means -- a plethora of subpar holiday albums from boring pop artists, gift wrap companies finally turn a profit and people begin wearing some of the silliest holiday-related garb imaginable, just to "get in the spirit."
Oh, and the retailers have come back! The
S&P Retail Index
, which tracks a collection of retail stocks, was up 5%.
Wal-Mart
(WMT) - Get Report
led the way with a 9.4% gain.
Gold, drug stocks and health care continued to rally in the wake of presidential uncertainty and investor reluctance to invest in high-multiple tech stocks. The
Philadelphia Stock Exchange Gold & Silver Index
rose 4.1%, while the
American Stock Exchange Pharmaceutical Index
rose 3% and the
S&P Health Care Index
rose 2.8%.
Some of these industries, old-school brick-and-mortar industries, have become darlings again. They're something of an oasis, a safe play in the land of uncertainty.
One part of the market that investors didn't like was semiconductors. The
Philadelphia Stock Exchange Semiconductor Index
continued to have a rough time of things, falling 6.4%.
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Bonds/Economy
Treasuries were under pressure for much of the day in reaction to rising stock prices and the prospect that
George W. Bush
will be the country's next president. But they had lately turned slightly to the upside, though only by a hair.
The only economic news of the day -- the
existing home sales
(
definition |
chart |
) report for October -- was weaker than expected, a positive development for the bond market because it suggests the economy is slowing. The pace of existing home sales fell to 4.96 million from 5.16 million in September. Economists polled by
Reuters
had forecast a rate of 5.14 million, on average.
The benchmark 10-year
Treasury note lately was up 1/32 at 100 27/32, lowering its yield to 5.635%.
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