Today's Market: Nasdaq Smiling a Little Ahead of the Weekend - TheStreet

Today's Market: Nasdaq Smiling a Little Ahead of the Weekend

A day after being beaten up by warnings from Gateway and Altera, tech stocks are showing a little life.
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It's a tentative rally for sure, but for at least today, the market has turned its frown upside-down. The major indices are rebounding from losses yesterday that took the

Nasdaq Composite Index to its lowest level since August 1999 and dropped the

Wilshire 5000 Total Market Index

dangerously close to bear-market territory.

Technology shares are rebounding, as investors are continuing the climb back that was witnessed in the last hour of trading yesterday. Money is flowing into the big-cap tech stocks, as well as networkers and fiber optic stocks.

Analysts believe today's rally might have a bit of teeth to it, but the bites are likely to be small. Strategists had been looking for a short-term rally in this beaten-up market. But after warnings on Wednesday after the close from chip maker

Altera

(ALTR) - Get Report

and computer maker

Gateway

(GTW)

prompted the latest stock selloff, a long-term and broad rebound seems less likely.

"I think I'm a believer in the rally today, which is sustainable in and of itself, because we're technically oversold," said Art Hogan, chief market analyst at

Jefferies

. "Unfortunately, I believe in the reasons we've been selling stocks since August. There's no clear catalyst until some of those reasons go away, including the deteriorating economic data that we've got to watch."

And all eyes are on the economy since evidence of a slowdown no longer exists just on a government-released sheet of paper. It's happening to companies like Altera and Gateway, which are seeing a decline in demand for their products. Even the latest weekly

jobs report showed that the number of jobs being lost is accelerating.

Still, there's today's bounce. Gateway was lately up 4.9%, rebounding somewhat from yesterday's sharp decline. And other major PC makers were in reasonably good shape, such as

IBM

(IBM) - Get Report

, lately up 4.4%, and

Dell

(DELL) - Get Report

, gaining 3.9%. The

Philadelphia Stock Exchange Computer Box Maker Index

, which tracks the companies that make the machines, gained 5.3% today.

Altera was also climbing back, gaining 6.7%. But chipmaking giant Intel was dropping 5% after

Credit Suisse First Boston

reduced estimates on the company's earnings. The see-sawing

Philadelphia Stock Exchange Semiconductor Index

gained 4.5% today -- even though a few semiconductor equipment names, including

Applied Materials

(AMAT) - Get Report

, were lower after CSFB reduced earnings estimates on four companies.

Defensives, meanwhile, were losing some ground. The market's posture has reflected anticipation of slowed growth in recent weeks and defensive stocks, such as drugs, food, beverages and utilities have rallied sharply.

UBS Warburg

downgraded

Pharmacia

(PHA)

and

Schering-Plough

(SHR)

today on valuations concerns, saying the stocks have run up too far. The

American Stock Exchange Pharmaceutical Index

, which tracks major drug companies, was most recently down 3.6%. Pharmacia recently lost 6.7%.

But to listen to strategists, these stocks may not be down for long. The market is desperately hoping the

Federal Reserve will signal some kind of willingness to ease off its inflation concerns. It's possible the Fed may do this as early as its meeting on Dec. 19. But the Fed will likely want to see softening in the labor markets. While jobless claims reports have displayed a slight increase in layoffs, the unemployment rate currently remains at a low 3.9%.

Market Internals

Breadth was strong on heavy volume.

New York Stock Exchange: 1,857 advancers, 897 decliners, 681.8 million shares. 72 new 52-week highs, 67 new lows.

Nasdaq Stock Market: 2,493 advancers, 1,232 decliners, 1.17 billion shares. 30 new highs, 173 new lows.

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Most Active Stocks

NYSE Most Actives

  • Lucent Technologies (LU) : 14.8 million shares.
  • Motorola (MOT) : 13.1 million shares.
  • Compaq (CPQ) : 11.7 million shares.

Nasdaq Most Actives

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Sector Watch

Commodity-related indices are faring just fine today. The

Philadelphia Stock Exchange Forest & Paper Products Index

was lately up 3.3%; the

S&P Chemical Index

gained 2.4%, and the

Philadelphia Stock Exchange Oil Service Index

rose 5.9%.

Internet stocks were benefiting from the release investors were feeling today.

TheStreet.com Internet Sector

index gained 3.8% today, helped along by the gains in online auctioneer

eBay

(EBAY) - Get Report

, which rose 2.4% today. On the downside, already-beaten-down

BroadVision

(BVSN) - Get Report

lost 11.9% today after it was downgraded by CSFB.

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Bonds/Economy

Treasuries are mixed following the release of mixed economic data. The stock market is also a factor, drawing interest away from the bond market.

Yesterday, bonds got a boost from falling stock prices.

The benchmark 10-year

Treasury note lately was down 4/32 at 101 28/32, lifting its yield to 5.497%. But shorter-maturity issues were up, lowering their yields.

In economic news, the

Purchasing Managers' Index

(

definition |

chart |

source

) fell to 47.7 in November from 48.3 in October. It had been forecast to rise slightly, but the release yesterday of an extremely weak

Chicago Purchasing Managers' Index

(

definition |

chart ) for November made market participants fear the national index would also fall sharply. Because it didn't, market reaction was muted.

Construction spending

(

definition |

chart |

source

) rose 0.8% in October, significantly more than the 0.1% forecast. The pace of construction spending, which benefits from low interest rates, rose to 8.6%, the highest since May 1999, from 7.7% in September.

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International

European markets staged a rebound after falling ahead of U.S. markets on Thursday. Paris'

CAC 40

was lately up just fractionally to 5928.50, while Frankfurt's

Xetra Dax

was recently up 133.29 to 6505.62. London's

FTSE

closed at 6170.4, up 28.2.

Asian markets recovered today. Hong Kong's

Hang Seng

gained 457.04 points to 14441.43, a 3.3% rise. Tokyo's

Nikkei 225

rose 186.82 to 14835.33, up 1.3%.

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