For a week there the divergence that has afflicted the market, where tech stocks rise and everything else does not, looked like it might have passed. For once it was not just the
Nasdaq Composite Index
, but the stodgy old-economy
Dow Jones Industrial Average
, that was rising.
But today it's been back to the yellow wood, with tech stocks following their well-trod path upward, while just about everything else has returned to the low road.
It's an amazing thing, the way tech keeps rising -- some are even beginning to suggest, only half jokingly, that perhaps tech stocks should be treated as a separate asset class. They don't seem to adhere to any of the old valuation rules. They rise despite the prospect of higher interest rates. They rise even though the
chairman has suggested again today that he does not want to see them head higher.
The gains in stock prices have created "additional purchasing power for which no additional goods or services have yet been produced,"
Boston College Conference on the New Economy
earlier today -- which is as much as saying that he worries that increased stock-market wealth will cause inflation.
Someone is courting hubris here -- either the chairman, for thinking he that he can slow the tech-stock behemoth, or tech investors, for blithely thinking that techs are somehow immune to the Fed.
Most people who try to make sense of tech stocks in valuation terms are just as confused as the chairman.
chief equity strategist Doug Cliggott reckons that to justify current valuations, tech-sector earnings will have to grow 10% faster than the rest of the market's for 20 years.
"In the past five years, tech has grown earnings 7% faster," he said. "If you go back 12 years, the tech sector has actually grown earnings a little bit slower than the nontech part of the market." The funny thing, thinks Cliggott, is that implicit in the markets tech-growth expectations is the idea that nontech companies will continue to aggressively buy tech -- that they really see some of those promised productivity gains. But if they're going to see those gains, why isn't it reflected in their multiples?
The Dow lately was off 95, or 0.9%, to 10,273 while the broader
was down 10, or 0.7%, to 1399.
Meanwhile, tech proxies were solidly higher. The Nasdaq was up 29, or 0.6%, to 4944, having traded as high as 4980.15 earlier. The
was up 51, or 1.2%, to 4494. The
Morgan Stanley High-Tech 35
was up 12, or 0.6%, to 2161, and
TheStreet.com Internet Sector
index was up 37, or 3%, to 1258.
was up 3, or 0.6%, to 601.
The 10-year Treasury was down 10/32 to 100 18/32, its yielding rising to 6.42%.
announced the publication of
Proceedings of the National Academy of Sciences
, a peer-reviewed manuscript, reporting that a single dose of NeoRx's proprietary
technology cured human lung, colon and breast cancers implanted in mice. The company said the manuscript appears in the Feb. 15 issue of the journal. The stock has soared all morning and was recently quoted up 37 3/4, or 175%, to 60.
New York Stock Exchange:
1,161 advancers, 1,723 decliners, 583 million shares. 109 new 52-week highs, 130 new lows.
Nasdaq Stock Market:
2,143 advancers, 1,912 decliners, 1.2 billion shares. 444 new highs, 68 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.