Despite the breadth of Monday's big rally, plenty of observers remain skeptical about the strength of the move higher, and in particular, the action in two of the session's best performing sectors -- airlines and dot-coms.
Both sectors did their part to pad the rally, with the American Stock Exchange Airline Index rising 8%, and TheStreet.com Internet Index ahead by 7.4%.
The airline and Internet sectors fared better than the broader averages, but the overall market's gains were impressive in their own right. The
Dow Jones Industrial Average
closed up more than 5%.
Many market watchers were hoping the buying frenzy was a sign the worst might be over for U.S. stocks, but not everyone was ready to say a full-blown turnaround for equities is underway. "We are getting a technical bounce from an unbelievably undersold position," said Tony Cecin, head of Nasdaq trading at U.S. Bancorp Piper Jaffray.
For the year, the airlines are still down about 44%, while Internet stocks are off about 60%. The question no one can answer definitively is how long buyers will stay interested after being burned several times this year by rallies that couldn't be maintained in the face of severe selling pressure and corporate scandals.
Within the airlines,
, the parent of United Airlines, was leading the group, with a gain of 24% to $5.91.
, the owner of American Airlines, was up 7% to $11.16.
were all adding more than 5%.
Even with the surge in interest in the carriers, Susan Donofrio, an airline analyst at Deutsche Bank, remained cautious about the sustainability of the move. "The problem is we need a catalyst," she said. "And I do not see one until we head into the fall."
Among Internet names,
was out in front of the dot-com index, tacking on 12% to $14.45.
"There was a lot of weakness in Amazon.com after its earnings report, said Dan Geiman, an analyst at McAdams Wright Ragen, a Seattle-based brokerage firm. "The whole sector is rebounding now."
were better by 4% to 6%.
Internet analysts were quick to point out that this group of stocks is known for wide swings, whether on the way up or on the way down.
"Amazon.com is high-beta stock, meaning that it is more volatile than the rest of the market," said Shawn Milne, an analyst at SoundView Technology Group. "Other sectors that had come down recently are also rallying, such as the Internet travel stocks. But these stocks move around quite a bit, too."
As a result, Milne wasn't putting too much stock into the rally in the Internet group. "I am not going to read much into a few hours of trading," said Milne. "Valuations still have to come down. These stocks are not cheap. But operating leverage is strong, and online demand is holding up."