Rocket Bounce
Stocks shifted into overdrive Friday with a thunderous bounce back from
Thursday’s depressed levels despite some inflationary economic numbers. The
Nasdaq led the way, posting a 7.9% gain, while the S&P 500 added 3.3% and
the Dow tacked on 1.6%.
The market opened mixed, but once talk of a possible weekend peace summit
taking place in the Middle East surfaced, stocks worked their way higher and
ended at their highs of the day.
The PPI showed an increase of 0.9%, which topped the 0.5% analysts had
expected, while the closely watched core rate rose 0.3%, which was greater than
the 0.1% analysts expected.
Retail sales rose 0.9% in September, which was greater than the 0.6% increase
analysts had expected.
Volume remained high, with 2.05 billion shares trading on the Nasdaq and 1.23
billion trading on the NYSE. Nasdaq volume equaled Thursday’s level, while NYSE
volume decreased by about 10%.
“You’re getting possibly a dead-cat bounce off a really
oversold market. People are shaking off the Mideast. They’re shaking off oil
prices. They’re shaking off what looked like a very inflationary PPI and retail
sales number because I just think this market has gotten way oversold,”
said Tim Heekin, Director of Trading, Thomas
Weisel Partners.Â
“On the
positive side, you’ve got cash levels at institutions at 10% to 15%, which are very high.
At hedge funds I think it’s closer to 50%, and I think that even with the PPI
and retail sales number, you’re starting to have people talking about a possible
easing of rates at the next FOMC meeting in November,” he added.
According to preliminary numbers, the Nasdaq soared 241.70 to 3316.38, the
S&P 500 gained 44.32 to 1374.10, and the Dow added 157.60 to 10,192.18.
Top sectors included semiconductors
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up 8.8%, Internets
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up 6.4%.
On the downside were integrated oils
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Gateway Computer
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the fire in tech, as many of the giants came back to life. Gateway jumped 9.48
to 53.11 and was joined to the upside by Dell
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Microsystems
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up 12%, JDSU
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Tech screamers were PMC Sierra
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up 28 29/32 to 228 1/2, Newport
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Looking ahead, the next piece of economic news due out is the August
inventories report, which will be released Monday at 8:30 AM ET. Analysts look
for an increase of 0.3%.
I’m looking forward to meeting many of our readers in Las Vegas this weekend.
It should be a great conference!