Nasdaq Soars To Record As Bonds Weaken
Despite a weak bond market and inflation concerns, the Nasdaq rocketed to another record close Thursday. The strength in technology stocks occurred as money rotated out of cyclicals, which had been among the top-performing groups in recent days.
Bonds and interest-sensitive stocks showed weakness Thursday on trade deficit news which showed that American consumers continue to spend. The Commerce Department reported that imports increased the trade deficit to $25.9 billion, while economists had looked for a $24.5 billion figure. More proof of a strong U.S. economy may give the Fed all the more reason to raise rates early next year.
Regardless of the economic back-drop, the “must own†tech stocks surged. According to preliminary figures, the Dow rose 19.57 to 11244.89, the Nasdaq soared 93.10 to 3715.05, and the S&P 500 added 5.45 to 1418.78.
Best performing groups on Thursday included semis [$SOX.X>$SOX.X], up 3.6%; computer technology [$XCI.X>$XCI.X], up 2.7%; computer software [$CWX.X>$CWX.X], up 3.0%; and Internets [$GIN.X>$GIN.X], up 2.1%.
Groups showing the most weakness include banks [$BIX.X>$BIX.X], down 1.7%; healthcare [$HCX.X>$HCX.X], down 2.3%; and forest and paper products [$FPP.X>$FPP.X], down 3.3%.
Interest rate concerns hurt the banking group [$BKX.X>$BKX.X] in Thursday trading. Regional banks saw the most selling pressure as the index sank 2.3% for the day. Leading the group lower were Wells Fargo [WFC>WFC], down 2 1/8 to 39 11/16; Bank of America [BAC>BAC], down 5/8 to 50; and US Bancorp [USB>USB], down 1 1/4 to 21 7/8.
Leading technologys higher again Wednesday was Microsoft [MSFT>MSFT]. The company began shipping Windows 2000 to PC manufacturers, and that has had a positive impact on the stock. After hitting an all-time high of 115, Microsoft finished the day up 5 3/16 to 113 5/8.
CMGI [CMGI>CMGI] also powered the Nasdaq and Net stocks higher after Wednesday’s announcement that it had better-than-expected earnings. The company also declared a stock split, and that sent shares up 21 13/16 to 221 9/16 in Thursday trading.
Adding to the Nasdaq’s strength was Network Solutions [NSOL>NSOL], the primary seller of “dot.com†names and addresses. The stock jumped 34 1/16 to 248 on news that it will join the Nasdaq 100 on Monday, December 20.
Leading the Dow to a positive close, in addition to Microsoft, were Hewlett Packard [HWP>HWP], up 5 ½ to 106 5/8; Wal-Mart [WMT>WMT], up 2 19/32 to 68 5/8; and Home Depot [HD>HD], up 2 15/16 to 96 7/16. Lagging on the Dow were Disney [DIS>DIS], down 7/8 to 28; Alcoa [AA>AA], down 2 ¾ to 76 1/4; and International Paper [IP>IP], down 2 15/16 to 52 7/8.
Traders now look toward Friday’s release of November’s new housing starts numbers. Wall Street estimates look for 1.65 million, so it will be interesting to see if the recent rise in interest rates has slowed the rate for new home building.