Intel Downgrade Sinks Nasdaq
A downgrade of Intel
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landscape Tuesday as high-quality techs sold off in sympathy with the chip king,
dragging the Nasdaq down 2.1% by the close. What did perform well, however, were
many of the disasters of the last six months like Internets, B2Bs, and
wireless-related companies.
Rotation into recently weak areas like airlines and retailers showed that the
market lacks conviction following August’s impressive rallies in most of the
major averages. Analysts are generally skeptical of the late-summer rally,
citing the fact that historically, September is usually a rough month for
stocks.
Volume Tuesday picked up from Friday’s levels but remained light, with 1.65
billion shares trading on the Nasdaq and 840 million shares trading on the NYSE.
"Is this recent rally too good to be true? When the number of doubters
and cynics are decreasing, it’s hardly ever good. The arguably near
self-fulfilling prophecy that a fourth quarter rally will happen has all of a
sudden brought the major stock market indices either to or within an eyelash of
new highs," said Brian Belski, Fundamental Market Strategist, U.S.
Bancorp/Piper Jaffray.
"Therefore, we are advising a strategy of owning quality leaders within
individual spaces, groups, and sectors over the near term, especially
given near-term complacent attitude about rising index prices," he
added.
According to preliminary numbers, the Nasdaq fell 91.12 to 4143.21, the Dow
rose 21.83 to 11,260.61, and the S&P 500 slipped 13.69 to 1507.08.
Top sectors included airlines
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products
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Internets
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On the weaker side were technology
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down 2.6%, and biotechs
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Among the tech giants under pressure were Intel
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down 3.6%, Sun Microsystems
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1.7%.
B2Bs posting big gains included Ventro
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up 8%, Commerce One
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Helping the Dow stay positive were International Paper
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Depot
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Intel were Merck
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Looking ahead, the second quarter productivity report will be released on
Wednesday at 8:30 AM ET, and Street consensus is looking for a 5.3% increase.