Dow Rises Above The Rubble
A cooler-than-expected third quarter Gross Domestic Product figure quelled
inflation fears and triggered a rally in the blue chips Friday, as the Dow
managed to gain 2.0% and close at its high of the day. Banks and broker/dealers
were the stars of the session, and they helped the S&P 500 rise a
respectable 1.1%.
Third quarter GDP came in at a 2.7% rate which was much lower than the 3.5% analysts
expected, but despite the good news, the Nasdaq gained only 0.2%. While the old
guard techs like Microsoft, Intel, and Sun Micro enjoyed solid performances,
many of the high flying techs continued to take a beating.
Nasdaq volume remained strong, with 2.06 billion shares changing hands.
Despite a 10% decline from Thursday’s volume, the Nasdaq enjoyed its
third-straight 2 billion share day. NYSE volume was 1.08 billion shares, which
was about 20% below Thursday’s level.
While analysts are still divided on whether or not the Nasdaq has established
a bottom, most are impressed by the fact that the Nasdaq continues to find
support above that 3000 level. Optimism about mutual fund tax selling coming to
a close has also brightened the near-term outlook for stocks.
“Several things argue for yesterday’s action being a ‘low’ for Nasdaq.
We are emphasizing the word ‘low’ here because we’re still going with the idea
that the bottom won’t secure until Nasdaq works above its 50-day moving
average,” said John Roque, Vice President, Arnhold and S. Bleichroeder,
Inc.
“Yesterday, we saw a nice intraday reversal on Nasdaq off of the 3000
level. The actual intraday low was 3081.36 compared to the recent intraday lows
of 3026.11, 3054.55, and 3071.25 and the intraday low of 3042.66 from May 24,
2000. Five times holding the 3000 level is a pretty good sign,” he added.
According to preliminary numbers, the Dow jumped 210.50 to 10,590.62, the
S&P 500 added 15.12 to 1379.56, and the Nasdaq rose 5.89 to 3278.07.
Top performing sectors included telecom
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up 3.1%, banks
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2.0%.
Under pressure were oil services
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down 3.7%, and semiconductors
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JDS Uniphase
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13/16 to 77 1/4 after topping analyst earnings estimates by 2 cents. JDSU helped
return confidence to the optical arena after a week of extremely volatile
trading.
Powering the Dow’s gains were J.P. Morgan
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up 5.5%, Microsoft
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biggest Dow loser was Disney
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Tech standouts included Avanex
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up 7%, Broadcom
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Looking ahead, traders will be watching Tuesday for a slew of economic
numbers, as the Chicago PMI, October Consumer Confidence, and September new home
sales are all released.
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