Summertime Blues
Stronger-than-expected economic numbers and earnings warnings from Nokia and
Ericsson helped send technology shares sharply lower Thursday as the Nasdaq fell
3.6%. Defensive and value stocks were the beneficiaries of the tech selloff, and
that helped the Dow finish up a respectable 0.7% and kept the S&P 500 to
just a 0.2% loss.
June durable goods increased 10% which was much higher than the 0.1% increase
analysts expected. A large jump in aircraft orders accounted for the increase. Without the transportation component, the number would have increased just 0.8%.
The employment cost index rose 1.0% for the first quarter, which was lower than the 1.1% increase that analysts had expected.
The sharp rise in durable goods orders suggested that the Fed rate hike cycle
may still not be finished, and that was enough to spook the market into a
selling mode. One bit of consolation for the Nasdaq was that even though it did
slip below its 200-day moving average, it did manage to close about 10 points
above its 50-day moving average.
Volume picked up slightly from Wednesday’s moderately heavy levels, as 1.15
billion shares changed hands on the NYSE and 1.72 billion shares traded on the
Nasdaq.
"The Dow Industrial Average once again is showing that people are
getting concerned and are moving into the value-oriented type of stocks. We
would expect to see over the next four to six days some strength coming back
into the Nasdaq type stocks, but in our opinion, since the Nasdaq is into a
major bear market, periods of strength should be used to take increased
protective measures," said Harry Laubscher, Market Analyst, Tucker Anthony.
"The technology area is probably the most susceptible to further
weakness after some nearby strength. By and large you’ve got to be extremely
cautious in markets like this," he added.
According to preliminary numbers, the Nasdaq fell 145.48 to 3842.24, the Dow
gained 69.65 to 10.586.13, and the S&P 500 eased 2.79 to 1449.63.
Top sectors were integrated oils
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$XOI.X |
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up 3.6%, and insurance
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$IUX.X |
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Internets
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$GIN.X |
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8.1%.
Nokia
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that sent the stock plummeting 14 11/16 to 41 1/8. The Nokia news also helped
compound the nervous tone market participants were in going into the day’s
trading.
The semiconductor sector was bloodied for the second-straight day, as big losses were registered by Lattice Semiconductor
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LSCC |
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RMBS |
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Among the Dow gainers that kept the average in the green were Exxon Mobil
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up 5.0%, American Express
(
AXP |
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MRK |
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AA |
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up 2.8%, Coca-Cola
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KO |
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Dow dogs were Hewlett Packard
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T |
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1.3%, and Intel
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PowerRating), down 1.3%.
Looking ahead, the second quarter Gross Domestic Product number will be
released at 8:30 AM ET. Street consensus looks for a 3.5% rate of growth.