Today's Market: Weebles Wobble, but Dow Won't Fall Down
Boing. Boing. Boing.
Like a four-year old on a pogo stick, the
Nasdaq Composite Index continued to bounce around, tottering and teetering. At midday, the technology-heavy kid was off his feet, slipping.
Meanwhile, the
Dow Jones Industrial Average was a sturdy player. The Dow was getting strength from the latest round of economic data that confirm the American economy is slowing.
Gross Domestic Product data came out this morning, showing signs that the gashouse known as the rampaging American economy was slowing. Third-quarter GDP grew 2.4%, higher than the expected 2.2% rate. Of course, that 2.2% was a revised estimate since the
Commerce Department
had last month called for third-quarter GDP to grow by 2.7%.
TheStreet.com
took a close look at the report in a
separate story .
Now what does this mean? Simply put, it means the economy isn't growing as fast as it once was. The latest GDP shows the lowest growth rate in four years. And this is a good thing because it gives more ammunition to those who would like the
Federal Open Market Committee to scale back its concerns about inflation when it next meets in mid December.
Among the blue-chips, broad happiness swept away heavy losses in
ExxonMobil
(XOM) - Get Exxon Mobil Corporation Report
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, which took a drop on news that
ABN Amro
downgraded it to add from buy. Retailer
Wal-Mart
(WMT) - Get Walmart Inc. Report
and jet setter
Boeing
(BA) - Get The Boeing Company Report
were the best of the brightest, beefing up the Dow.
On the Nasdaq, where volatility was king and tech issues were the wild card, semiconductors -- the chip companies that make the brains behind cell phones and computers -- were recovering.
Sure, the
Philadelphia Stock Exchange Semiconductor Index
has been rocked like a hurricane lately. The index is off 22% since Halloween as investors rush out of chips, fearing an industry-wide slowdown. Today, analysts rushed to defend the industry.
Well. Sort of.
Merrill Lynch
issued a report this morning bearing a telling headline: "Over-reacting?" In it, the analyst addressed concerns in the wake of
Broadcom's
undefined
massive stumble over the last few days. Joe Osha, the analyst, limited comments to wireline semiconductors, which are companies that make chips for land-based telephony as opposed to wireless telephony.
Merrill wrote that wireline companies, like Broadcom,
Vitesse Semiconductor
(VTSS)
and
Applied Micro Circuits
(AMCC)
, "are further along in the process of working off inventory and resuming order growth" and that "investors have more fully factored the potential problems into stock prices."
Essentially, Merrill told investors to relax and stop the beatings.
Morgan Stanley Dean Witter
, which upgraded Broadcom to strong buy from outperform with a $225 price target.Bounding back, both the index that tracks the chip sector and Broadcom were up.
Market Internals
Internals over in New York were pretty good, well, positive, at least. Winners had an edge on losers. Meanwhile, the Nasdaq's collection of stocks was mostly negative -- yet again. Volume was better than it has been in recent sessions, but that's not saying very much. Action was still pretty light.
New York Stock Exchange: 1,301 advancers, 1,347 decliners, 573 million shares. 60 new 52-week highs, 87 new lows.
Nasdaq Stock Market: 1,314 advancers, 2,315 decliners, 1.0 billion shares. 32 new highs, 388 new lows.
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Most Active Stocks
NYSE Most Actives
- Lucent (LU) - Get Lufax Holding Ltd American Depositary Shares two of which representing one Report: 15.5 million shares.
AT&T (AOL) : 13.4 million shares.
EMC (EMC) : 11.9 million shares.
Nasdaq Most Actives
- Oracle (ORCL) - Get Oracle Corporation Report: 30.1 million shares.
Cisco (CSCO) - Get Cisco Systems Inc. Report: 29.3 million shares.
Intel (INTC) - Get Intel Corporation Report: 28.2 million shares.
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Sector Watch
Natural gassers leaked value today, with the industry-tracking
American Stock Exchange Natural Gas Index
falling 4.2% at midday. Sure, it's cold out and winter can drive the price of gas up a bit, but this index was easing a bit after gaining 8.8% over the past 10 sessions. Despite today's fall, gassers weren't too far from a 52-week-high.
Oil prices have been slipping lower over the past few days. Other pertroleum-related stocks suffered, thanks to that ABN Amro downgrade of ExxonMobil. The
American Stock Exchange Oil Index
, of which ExxonMobil is a member, was off 3.3%. The
Philadelphia Stock Exchange Oil Service Index
was off 6.8%.
Gold stocks, frequent victors last week as investors sought a safe haven, were down. The
Philadelphia Stock Exchange Gold & Silver Index
was off 2.3%. As of yesterday's close, gold stocks had ramped up 13% since Nov. 17.
Outside of technology, healthcare and financial stocks were higher. The
Philadelphia Stock Exchange/KBW Bank Index
was the best of the bunch, rising 2.6%.
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Bonds/Economy
Treasuries are narrowly mixed following the release of stronger-than-expected data on third-quarter economic growth.
The benchmark 10-year
Treasury note lately was up 5/32 at 101 11/32, bringing its yield to 5.570%.
The government revised lower its estimate of third-quarter gross domestic product to 2.4% from 2.7%. That is the slowest rate since the third quarter of 1996, but not as slow as economists were expecting. Economists polled by
Reuters
forecast a revision to 2.2%, on average.
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International
Over in Europe, stocks were taking hits, nearing the end of the trading day. And not in that mellow John Denver "Rocky Mountain High" sort of way.
London's
FTSE
was off 84.9 to 6164.9, bouncing off session lows when American markets opened, bolstered by the positive economic data. But --
sigh
-- once the Nasdaq got a hold of the red, so did the FTSE. Losses were rather steep in technology.
But on the continent, stocks were not under water anymore, just damp. France's
CAC
dropped 8.6 to 6060.65. Germany's
Xetra Dax
rose 1.11 to 6626.67.
And Japan, land of the rising sun, was land of the falling technology issue. Lately, the
Nikkei 225
has been drawing its direction from the Nasdaq, and whichever way it heads usually indicates how the technology-heavy Nikkei will fair. And after yesterday's bad day here, the Nikkei fell 151.23 to 14,507.64. Meanwhile, Hong Kong's
Hang Seng
has dropped 397.16 to 14,169.06.
In the currency market, the euro last traded at $0.8573 and the dollar fetched 111.2 yen.
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