Market Waltzes Through a Minefield, but Comes Out OK - TheStreet

Market Waltzes Through a Minefield, but Comes Out OK

Nasdaq closes at a new record high as tech stocks turned in a solid performance.
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SAN FRANCISCO -- Having side-stepped the Fed and tiptoed around the wild gyrations (and, of course, through the tulips) in the bond market earlier in the week, today's employment report seemed like little more than a walk in the park for the equity market.

But after blue-chip indices stumbled from early heights, the

Nasdaq Composite Index

fell sharply in the final hour of trading before recovering to reclaim the high ground of record territory.

After trading as high as 4294.84 around 3:00 p.m., the Nasdaq saw its gains erode but managed to close up 33.16, or 0.8%, to 4244.14, eclipsing its previous closing high of 4235.40 set

Jan. 21. More impressively, it finished the week 13.2% above its intraday low of 3748.03 set

Monday's.

The tech-acclaimed index was supported today by heavyweights such as

Microsoft

(MSFT) - Get Report

and

Cisco

(CSCO) - Get Report

. The

Nasdaq 100

rose 0.6%.

Elsewhere,

Corr Therapeutics

(CORR) - Get Report

soared 59% after announcing positive findings in a trial for its Integrilin drug for treatment of heart attack sufferers.

The Comp also got a boost from the underclassmen at Bellwether U., including

Conextant Systems

(CNXT) - Get Report

and

Network Appliance

(NTAP) - Get Report

. The newest issues also fared well, including

Firepond

(FIRE)

, which soared 355% from its IPO price.

But the majority of over-the-counter traded stocks finished the session in arrears.

Internet favorites were notably uninspired even at the Comp's intraday heights.

TheStreet.com Internet Sector

index fell 31.35, or 2.7%, to 1140.26 as components such as

Amazon.com

(AMZN) - Get Report

and

Open Market

(OMKT)

retreated from recent gains.

Also,

TheStreet.com New Tech 30

fell 2.27, or 0.4%, to 639.86. Unveiled Jan. 5, the TSC New Tech 30 is a market-cap-weighted index focusing on tracking the so-called hot money part of the market. A list of index components is available at

http://www.thestreet.com/newtech/.

Among blue-chip proxies, the

Dow Jones Industrial Average

closed down 49.64, or 0.5%, to 10,963.80 after trading as high as 11,089.45 and as low as 10,943.02. The

S&P 500

closed off 0.60 to 1424.37 vs. its intraday high of 1435.91.

In addition to Microsoft, the Dow was aided by

General Electric

(GE) - Get Report

and

Hewlett-Packard

(HWP)

, while

J.P. Morgan

(JPM) - Get Report

and

Procter & Gamble

(PG) - Get Report

proved its greatest laggards.

The

Russell 2000

rose 3.89, or 0.8%, to 525.52 although market internals were mixed.

"The selloff late Friday was more of a 'let's square up for the weekend' trade" than anything fundamentally driven, said Bob Basel, director of listed trading at

Salomon Smith Barney

. "Today's economic data didn't prove to be anything more than inconclusive, now we look to next week's data."

In

New York Stock Exchange

trading, 1.045 billion shares were exchanged while declining stocks led advancers 1,563 to 1,419. In

Nasdaq Stock Market

action 1.757 billion shares traded while gainers led 2,152 to 1,972. New 52-week lows bested new highs 109 to 103 on the Big Board while new highs led 279 to 57 in over-the-counter trading.

The Furor in Gold & Bonds

The action in equities was accompanied by another tumult in bonds and rumblings from the gold market, the latter featuring the requisite rumors about hedge funds and broker/dealers caught short a rapidly rising asset.

Reacting both to

yesterday's big rally and today's strong

employment report, the price of the 30-year Treasury bond fell 1 21/32 to 98 5/32, its yield rising to 6.26%.

Meanwhile, the

Philadelphia Stock Exchange Gold & Silver Index

rose 12.2% as the price of gold jumped 8.3% to $314 an ounce in

Comex

trading.

Placer Dome

(PDG)

rose 24.3% after suspending its hedging activities, citing an expectation of higher gold prices going forward.

In addition, market participants reported heavy call buying activity, suggesting traders short gold were scrambling to cover. The action was reminiscent of yesterday's activity in the bond market and the rumor mill even featured some of the same actors.

"I heard

Goldman Sachs

and

Deutsche Bank

-- among others -- were frantic buyers

of gold calls which would suggest a short squeeze," said John Hathaway, senior portfolio manager at

Tocqueville Funds

. "Both of those firms were identified as having been hurt being short the long bond. I don't know if they're interconnected, but I think they were doing a gold carry trade, and used the low interest cost on borrowed gold to fund other stuff they were doing, which didn't work either."

Goldman Sachs and Deutsche Bank each declined to comment, citing policy against commenting on rumors.

Matt Ford, a metals and mining analyst at

U.S. Global Investors

in San Antonio, sought to downplay the rumors, crediting the spike in gold to inflation concerns generated by the jobs report and recent swings in the bond market. Additionally, Placer Dome's announcement is a "big deal," he said as it could result in "a large amount of gold potentially

being removed from the market."

Still, there was brisk call activity on the

Philadelphia Stock Exchange

, where the February 60 XAU calls rose 156%.

However, Basel said the activity in the bond and gold markets was not effecting the broader equity market in a substantial way today. "You can't discount it, but it was a much bigger factor yesterday," he said. "The situation hasn't gone away but it wasn¿t like people were harping on it all day long."

The equity market is trading in a world of its own, he said, and "within the market, techs are doing one thing while the rest of the market is doing another."

Among other indices, the

Dow Jones Transportation Average

fell 12.63, or 0.5%, to 2608.96; the

Dow Jones Utility Average

slid 6.31, or 2%, to 309.30; and the

American Stock Exchange Composite Index

lost 5.36, or 0.6%, to 882.97.

For the week, the Dow rose 2.1%, the S&P gained 4.7%, the Nasdaq soared 9.2%, the Russell added 4.1%, the DOT climbed 6.1%, the TSC New Tech 30 jumped 10.4%, the Dow transports rose 1.1%, the Dow utilities added 0.9% and the Amex Composite rose 1.7%.

For coverage of today's top stocks in the news, see the Company Report, published separately

.