(
Updated from 4:07 p.m. EDT
)
Investors took a mid-summer break from selling technology stocks, but turned up the heat on some of their Old Economy counterparts.
After a session of clinging to some decent early gains, the
Dow Jones Industrial Average faded into the close, up 10.81 to 10,521.98, though well off its intraday high of 10,603. Meanwhile the tech-heavy
Nasdaq Composite Index was happily sporting a triple digit gain, on the heels of its 10.5% slide last week. The Comp gained 103.99 to 3766.99. The
S&P 500 was up 10.94 to 500.64, and the small-cap
Russell 2000 rose 10.42 to 500.64.
While no one was complaining about the action, hardly anyone was set to celebrate just yet. Skeptical market watchers chalked up the action as a natural response to last week's
slippage.
"The upside is really related to the fact" that last week's action was so weak, said Bill Schneider, head of U.S. equity block trading at
UBS Warburg
. "In one day, you don't make back the damage done in the entire last week."
John Bartlett, director of economic and market strategy at
Commerce Bank
in St. Louis, echoed the feeling. "I just think a lot of people really don't know what to believe. That is why you have these up and down days," he said. Bartlett said his firm still likes technology, "despite all the comings and goings," and has also focused on programmable logic stocks, such as
Altera
(ALTR) - Get Report
as well as analog device stocks, citing strong underlying demand in those areas.
Bartlett said his firm seeks to remain grounded and avoids getting swept up in the kind of rapid sector rotation that has characterized market activity of late. "We have a reasonably optimistic outlook. We hold the stocks that we like and let others trade them around."
On the bright side of today's unpredictable action, stocks were able to bounce back from a shaky downturn earlier this morning after a hotter-than-expected "prices paid" component in the July
Chicago Purchasing Managers' Index
(
definition |
chart ) pressured them into the red. The index fell more than expected, to 52 in July from 56.8 in June. But a sub-index measuring prices paid by Chicago-based manufacturers rose sharply, to 70 from 63.6. That's below its March peak, but still raises concerns about accelerating inflation, even in conjunction with slower economic growth
Most investors were relieved to see that today's dance in the red was brief. Technology stocks turned around, remained in the green for most of the day, and picked up some steam heading into the close. On the Nasdaq, fiber-optic stock
SDL
(SDLI)
was the top gainer, sailing up 26, or 8.1%, to 347 1/16, while
PMC-Sierra
(PMCS)
was second in line, up 16 5/8, or 9.4%, to 193 13/16.
Internet stocks were in rebound mode along with the Comp, with
TheStreet.com Internet Sector
index, the
DOT, up 27.19, or 3.9%, to 726.36.
The Dow did not end the day quite as strong, weighed down heavily by
Wal-Mart
(WMT) - Get Report
, which lost 6.1%, even as its tech components were showing some fire.
Amid talk that stocks were getting marked up because of end-of-the month portfolio showing -- which would undermine the significance of today's upside -- much of the near-term focus will shift to some key economic indicators for the rest of the week, including tomorrow's
National Association of Purchasing Manager's
report and Friday's
employment report
for a read on inflation signals.
Market Movers
FPL Group
(FPL) - Get Report
, parent company of
Florida Power & Light
, got whacked while
Entergy
(ENT) - Get Report
was higher after the two announced a $7 billion
merger. The combination would create the largest energy company in the U.S. FPL shares were recently trading off 8.6% and Entergy was up 2.5%.
Juno Online
(JWEB)
sprouted wings after it was
reported that
Time Warner
(TWX)
will allow the company to provide high-speed Internet services on its cable network. This marks the first time Time Warner has given an independent ISP access to its cable lines. Juno jumped 13.3% while Time Warner rose 1.7%.
Qualcomm
(QCOM) - Get Report
was climbing higher after it and
Ford
(F) - Get Report
were said to be planning a
joint venture that will deliver wireless services to cars. Qualcomm was recently up 4%, while Ford was up almost 1%.
Earnings Season Winds Down
The two fattest weeks for earnings are already past, but today saw several oil services and utilities companies report.
Baker Hughes
(BHI)
and
Union Carbide
(UK)
announced this morning, with Union Carbide reporting that it earned 94 cents a share vs. estimates of 85 cents.
Texas Utilities
(TXU)
reported earnings of 87 cents a share.
Market Internals
Breadth was negative on moderate volume.
New York Stock Exchange: 1,707 advancers, 1,158 decliners, 930.4 million shares. 77 new 52-week highs, 45 new lows.
Nasdaq Stock Market: 2,315 advancers, 1,747 decliners, 1.5 billion shares. 42 new highs, 152 new lows.
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Most Active Stocks
NYSE Most Actives
- Lucent (LU) : 18.65 million shares.
Nokia (NOK) - Get Report: 17.8 million shares.
General Electric (GE) - Get Report: 17.19 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Report: 50 million shares.
JDS Uniphase: 38 million shares.
Microsoft (MSFT) - Get Report: 34.9 million shares.
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Sector Watch
Retailers will be posting July
same-store sales Thursday, and the way investors have been treating the sector, you'd reckon they won't come in well. The
S&P Retail Index
was down 3.6%. For most retailers, the second quarter ends today. Earnings expectations for the period have steadily fallen on signs the economy is beginning to feel some of the
Fed's headwinds.
With same-store sales, some retailers will, inevitably, issue earnings warnings. That, too, may be damaging the sector today.
Transportation stocks came back on good strength in airlines. The
Dow Jones Transportation Index
rose 3.2%. Among the strongest were
Delta Air Lines
(DAL) - Get Report
, up 4.9%,
AMR
(AMR)
, holding group for
American Airlines
, up 5.4%, and
Southwest Airlines
(LUV) - Get Report
, up 6.6%.
Insurance sector stocks were higher, with the
S&P Insurance Index
up 1%. The insurers have been one of the few sectors performing well in recent weeks.
Some tech and telecoms that took big hits at the end of last week, were still in fairly good shape including telecom
Ericsson
(ERICY)
chip-technology firm
Rambus
(RMBS) - Get Report
,
Nokia
(NOK) - Get Report
and
Intel
(INTC) - Get Report
were rebounding. Intel split 2-for-1, which went into effect at this morning's open.
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Bonds/Economy
Treasuries are holding steady after falling modestly in the wake of today's only key economic release, the Chicago Purchasing Managers' Index. The index fell more than expected, to 52 in July from 56.8 in June. A sub-index measuring prices paid by Chicago-based manufacturers rose sharply, to 70 from 63.6.
The benchmark 10-year Treasury note lately was unchanged at 103 10/32, to yield 6.040%.
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International
European markets
finished the day higher.
In London investors remained somewhat cautious following Wall Street's fall on Friday and the
Bank of England's
Thursday meeting on domestic interest rates. But a late surge by
Vodafone AirTouch
(VOD) - Get Report
helped the market end on a positive note. The
FTSE
finished up 29.6 to 6365.3.
Other major European markets did better than that. In Paris, the
CAC
closed up 126.77, or 2%, to 6542.49. Frankfurt's
Xetra Dax
was up 102.77, or 1.4%, to 7231.07 in late trading.
The euro was lately trading higher at $0.9261.
Asian markets nose-dived overnight following the Nasdaq's hefty selloff Friday.
Japanese shares clawed out of a hole as the
Nikkei 225
index fell below a key psychological support level of 15,500 during the trading session. Overall, the Nikkei shed 111.08 by the close, or 0.70% to finish at 15,727.49.
The greenback edged slightly higher against the yen to fetch 109.50 in Tokyo trading. Many currency dealers say the dollar has a chance to climb to 112.00 over the next month or so, or as long as the stock market remains bogged down. The dollar was recently trading at 109.38 yen.
With rate worries fresh in investors' minds once again following the hotter-than-expected GDP in the U.S., Hong Kong's
Hang Seng
index dropped 342.95, or 2.0%, to 16,840.98 overnight. With the territory's currency pegged to the U.S. dollar, any rate rise stateside means higher rates at home.
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