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
and computer maker
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
. "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
, lately up 4.4%, and
, 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
, 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.
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%.
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
- Intel (INTC) - Get Intel Corporation Report: 50.97 million shares.
Cisco (CSCO) - Get Cisco Systems, Inc. Report: 38.5 million shares.
WorldCom (WCOM) : 38.1 million shares.
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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
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
, which rose 2.4% today. On the downside, already-beaten-down
lost 11.9% today after it was downgraded by CSFB.
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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
) 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
chart ) for November made market participants fear the national index would also fall sharply. Because it didn't, market reaction was muted.
) 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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European markets staged a rebound after falling ahead of U.S. markets on Thursday. Paris'
was lately up just fractionally to 5928.50, while Frankfurt's
was recently up 133.29 to 6505.62. London's
closed at 6170.4, up 28.2.
Asian markets recovered today. Hong Kong's
gained 457.04 points to 14441.43, a 3.3% rise. Tokyo's
rose 186.82 to 14835.33, up 1.3%.
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