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The performance gap among major stock proxies narrowed a bit today, but only a little. Very little, considering the disparity.

So far in 2000 (we won't even get into October-to-date), the stars in the market have been the

Nasdaq Composite Index

and the

Russell 2000

, while the

Dow Jones Industrial Average

and the

S&P 500

have been under siege.

Stocks opened to the upside in an effort to begin repairing

Friday's damage. But their journey into the green was short-lived, and major market averages quickly tumbled into the red, bottoming out around 11:20 a.m. EST. The Nasdaq Comp and the Russell 2000 traded sharply lower for a good portion of the rest of the session, while the Dow and the S&P 500, although sporting losses, declined modestly at worst.

But beginning around 2:30 p.m., having concluded things had fallen enough, traders started buying, sending the Dow and the S&P 500 into positive territory and other major proxies well off their session lows.

Overall, traders shunned the highfliers and flocked to beaten-down sectors of the market, such as banks and some cyclicals.


Morgan Stanley Cyclical Index

rose 0.5%. Elsewhere in the world of the economically sensitive, the

S&P Chemicals Index

soared 4.9%.



was a star, rising 2 1/2 to 54 3/16.

Papers on Fire

Trading on the heels of news that

Stora Enso

is buying

Consolidated Papers


for $4 billion, a huge premium over Consolidated's closing price from Friday, sent shares of Consolidated flying and paper stocks in general rose in sympathy. Consolidated, based in Wisconsin Rapids, Wis., soared 10, or 38.5%, to 36. The

Philadelphia Stock Exchange Forest & Paper Products Index

rose 2.5%.

The Dow surged 85.32, or 0.8%, to 10,304.84, after trading down 115.72 to 10,103.80 intraday. Reflecting the overall strength in financials and cyclicals, the biggest powerhouses in the Dow were

General Electric








. Merck, up 5.7%, set a buyback of up to an additional $10 billion of its stock.

The S&P 500 rose 6.08, or 0.5%, to 1352.17, after trading down as much as 1331.88.

Meanwhile, the Nasdaq Comp fell 29.62, or 0.7%, to 4382.12, but closed well off its intraday nadir. At its intraday low, the Comp had tumbled 120.73 to 4291.01. Semiconductor stocks did their best to push up the Comp, but by themselves couldn't manage to propel it to a positive close. The

Philadelphia Stock Exchange Semiconductor Index

exploded up 5.8%.

The Russell 2000 tumbled 4.73, or 0.9%, to 540.95, but off its session low of 531.40.

Biotech was again a big mover today, but on the downside. The

Nasdaq Biotechnology Index

tumbled 3.1%, helping to weigh on the Comp.

Internet stocks took a bit of a thumping, but not too severe. Internet Sector

index slumped 11.72, or 1.1%, to 1084.90, but well off its intraday bottom of 1060.84. New Tech 30

rose 2.42, or 0.3%, to 725.77. The TSC New Tech 30, unveiled Jan. 5, is a market-cap-weighted index focused on tracking the most scorching part of the market, the magnet for Wall Street's hot money. A list of the index components is available at

Rate Worries Persist

While the rebound was heartening, that doesn't mean that the market's on its way to the stratosphere just yet. Worries that there will be several more


interest-rate hikes this year were again said to weigh on the market. Much of that worry can be traced back to Fed Chairman

Alan Greenspan's


testimony last week. Conversely, the Treasury market rallied.

The 10-year note was up 30/32 to 101, yielding 6.37%. The 30-year Treasury bond was up 31/32 to 102 8/32, putting its yield at 6.09%. (For more on the fixed-income market, see today's Bond


A good portion of the Treasury market's advance came compliments of the weakness in stocks. Treasuries managed to hold onto most of their gains despite a solid rebound in equities.

Dave Eberhart, an analyst at

Optima Investment Research

in Chicago, said that "Greenspan made it clear that more rate hikes are on the way." Eberhart said "no matter how you slice it, it's not good for stocks." He said the Dow and cyclical stocks have already priced in some rate increases, but other areas of the market, like the Comp and the Russell 2000, have not.

Eberhart pointed out that the S&P 500 broke through a key technical support level last Friday when it closed below 1350. He said that level should now act as resistance, which it managed to close above today. He said there's not a lot of support until about 1300 for the S&P 500, and that's mostly psychological.

'Close to a Trading Low'

Over the short term, the worst might be over, according to some market watchers.

"I think we're close to a trading low," said Greg Nie, chief technical analyst at

First Union Securities

in Chicago, this afternoon before the market rebounded. He added that the market is working on a good oversold condition and "I'd look for a low very soon."

Nie is looking for an oversold low and then a recovery try. In that recovery attempt, he said it will be important to see how many of the market's technical negatives are resolved, though he doesn't think they all will be. Among the technical negatives he pointed to was the market's poor breadth, which has been a problem for the last two years or so.

Nie pointed out that the Dow industrials and the

Dow Jones Transportation Average

"have born the brunt of the chart damage." The technician said that it would be a positive if the Dow can get back above its 200-day moving average, which would be to just under 10,900 and for the transports to get above 2500 that would be a positive.

The Dow transportation average advanced 28.34, or 1.2%, to 2459.14;


Chicago Board Options Exchange Market Volatility Index

, a measure used to gauge fear in the options market, declined 0.90 to 27.55, after surging as high as 30.69 intraday. According to some analysts, the higher the VIX reading, the better, because it suggests that the market is near a bottom. Another contrarian indicator watched by some is the equity put/call ratio. That, however, closed at 39, less than bullish for contrarians.

Energy-related stocks took a hit. The

Chicago Board Options Exchange Oil Index

surrendered 1.1%, while the

Philadelphia Stock Exchange Oil Service Index

shed 1.9%. The

American Stock Exchange Natural Gas Index

fell 1.6%.


New York Stock Exchange

trading, 980.1 million shares were exchanged while declining stocks beat advancers 1,658 to 1,358. In Nasdaq action 1.76 billion shares traded while losers defeated winners 2,462 to 1,808. New 52-week lows beat new highs 194 to 37 on the NYSE while new highs beat new lows 224 to 149 in over-the-counter trading.

Among other indices, the

Dow Jones Utility Average

slipped 2.96, or 1%, to 295.90, while the

American Stock Exchange Composite Index

rose 2.50, or 0.3%, to 934.46.

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