Rollercoaster Action
Earnings worries and a mini panic in the optical sector drove the Nasdaq down
by more than 4% Thursday, but buyers returned late in the session, sending the
Nasdaq surging back up enough to notch a 1.3% gain for the day.
For all the gut-wrenching action on the Nasdaq, the S&P 500 closed down
less than one point, while the safe-haven Dow managed a 0.5% gain.
Volume remained heavy as Nasdaq level rose 4% above Wednesday’s level with
2.26 billion shares trading. NYSE volume equaled Wednesday’s level as 1.29
billion shares changed hands.
In economic news, the third quarter Employment Cost Index rose the expected
0.9%, and because it was not lower, it had a dampening effect on stocks at the
open.
“I believe that the market is finally getting around to re-pricing the
balance of the high-flying technology stocks. This re-pricing is best evident in
the way in which they are treating Verisign
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excellent quarterly results,” said Scott Cummings, General Partner, Agile
Asset Management.
“These stocks have been overvalued and now finally are getting
re-priced. The question which remains, which no one knows, is what will be the
new benchmark or appropriate valuation for some of these very rapidly growing,
next generation Internet infrastructure plays.. They deserve premium multiples,
but we don’t know what the appropriate premium is anymore,” he added.
According to preliminary numbers, the Dow gained 53.64 to 10,380.12, the
Nasdaq added 42.55 to 3272.12, and the S&P 500 eased less than a point to
1364.44.
Top performing sectors were semiconductors
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technology
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up 2.3%.
Under pressure were banks
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down 2.9%, and insurance
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Verisign posted third quarter earnings of 18 cents per share, topping analyst
estimates of 6 cents per share, but the stock fell 5 1/8 to 142 5/16. Verisign
had traded as low as 120 intraday and was one of the beneficiaries of the
late-day bounce.
One of the wildest rides of the day was Ariba
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13/16 before rallying back to close up 17 17/32 to 133 1/4. Ariba is scheduled
to be added to the Nasdaq 100 after the close on Friday.
Dow winners were Intel
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International Paper
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which fell 1 9/16 or 6.7% to 21 13/16.
All eyes now focus on Friday’s third quarter GDP numbers which will be
released at 8:30 AM ET. Street estimates look for a cooling down of the economy
to a 3.5% rate of growth.