SAN FRANCISCO -- Once they stopped doing impersonations of Linda Blair, investors returned to doing what has come most naturally in recent years: buying technology stocks while shunning blue-chips.
But a modest repeat of the head-spinning volatility evident
yesterday re-emerged in the final hour, dramatically trimming the
Nasdaq Composite Index's
gains while sending blue-chip averages deeper into negative territory.
The late-session selling encouraged some market observers to contend the recent volatility has resulted in a change in psychology; specifically, that investors will now be anxious to sell rallies rather than buy dips.
But Sam Ginzburg, senior managing director of equity trading at
, disputed that notion, calling today part of the "calming process" necessary after the recent gyrations.
"We'll have a couple of volatile days as people start getting used to what happened, but I think the plunge is over," Ginzburg said. "People will come back and start buying 'em again. Then buying begets buying. It may not go up as quickly as it came down but the frenzy will start again."
It may not have been frenzied, but some aggressive buying in the tech and biotech sectors emerged today once some initial volatility evaporated.
After trading as low as 4009.09 early on, the Comp rose steadily thereafter, reaching as high as 4286.88 with about an hour left in trading.
The enthusiasm was engendered by some positive fundamental news in the tech and biotech areas, plus hopes yesterday's midday levels will prove to be the index's nadir. But the Nasdaq faded into the close, trading briefly in negative territory before closing up 20.45, or 0.5%, to 4169.34.
The afternoon selling exacerbated early weakness in bellwethers such as
surrendered midday gains. The
finished down 3.5% to 4030.69 after trading as high as 4156.43.
Much as they led yesterday's bounce, chip stocks were at the forefront of today's midday tech rally.
Advanced Micro Devices
rose 12.1% after forecasting its first-quarter sales would top $1 billion;
upped its recommendation on AMD.
rose 12.4% after
upped its rating.
The enthusiasm spread to other chip and equipment makers such as
. Each fell from their session highs but still registered solid gains to help the
Philadelphia Stock Exchange Semiconductor Index
The Comp also got a boost from biotech names such as
, which rose sharply after
sought to clarify comments which have roiled the group since last month.
American Stock Exchange Biotech Index
rose 5.6%, and the sector helped the
climb as high as 526.13, before finishing up 11.92, or 2.4%, to 518.04.
Elsewhere in tech,
added 12% after
Donaldson Lufkin & Jenrette
upped its recommendation.
Internet stocks struggled to sustain a rebounded from their recent shellacking;
TheStreet.com Internet Sector
index closed up 1.18, or 0.1%, to 971.98 after trading as high as 1012.96.
Dow Jones Industrial Average
fell 130.92, or 1.2%, to 11,033.92 after trading as high as 11,218.21 and as low as 11,002.58.
In addition to Microsoft and Intel, the Dow was sabotaged by weakness in components such as
were the Dow's best performers.
Once as high as 1506.55, the
closed off 7.36, or 0.5%, to 1487.37.
Energy stocks in general tumbled, although crude prices stemmed their recent decline. The
American Stock Exchange Oil & Gas Index
fell 2.2% while the
Philadelphia Stock Exchange Oil Service Index
Meanwhile, airline stocks rallied behind strength in
, which rose 5.8% after
Salomon Smith Barney
upped its recommendation. The
Amex Airline Index
rose 3.8% while the
Dow Jones Transportation Average
rose 99.33, or 3.7%, to 2824.28
New York Stock Exchange
trading, 1.1 billion shares were exchanged while advancers led declining stocks 1,658 to 1,305. In
Nasdaq Stock Market
action 1.9 billion shares traded while gained led 2,269 to 1,973. New 52-week lows bested new highs 43 to 17 on the Big Board and by 122 to 20 in over-the-counter trading.
Miles to Go
Although few were lamenting today's action, Ed Nicoski, chief market strategist at
U.S. Bancorp Piper Jaffray
in Minneapolis, cautioned against complacency regarding the tech sector.
"Yesterday's tape action looked climactic in nature, but I don't think all the problems have vanished," Nicoski said. "Basically, things are going to start to quiet down a bit but I don't think the firepower is there to push this thing up aggressively."
Yesterday's wild action will cause investors to rethink the "merits and demerits" of momentum investing vs. value investing and the merits of having more diversification, the strategist said. "The market is going to become much more quality oriented and secondary 'dream' stocks will remain relatively illiquid and unwanted."
Nicoski recommended investors "continue to diversify into Old Economy stock that have been totally washed out," because they have better risk/reward outlook than most tech names.
"Tech is the leadership, but compared to 6 to 12 months out they're still overbought," he continued. "It's going to take some time to let things settle down."
He declined to recommend specific stocks but noted the action in
-- which soared 23% today after posting better-than-expected same-store sales for March -- as an example of the kind of upside available in certain non-tech areas.
Among other indices, the
Dow Jones Utility Average
rose 1.17, or 0.4%, to 294.86; and the
American Stock Exchange Composite Index
climbed 14.19, or 1.5%, to 956.71.
The price of the 10-year Treasury note rose 4/32 to 104 19/32, its yield declining to 5.88%.
For coverage of today's top stocks in the news, see the Company Report, published separately