Nasdaq Battles Higher In Volatile Session
Stocks soared early in the session, but quickly gave up those gains after interest-rate worries and a somewhat unfriendly National Association of Purchasing Managers Report hinted at inflationary pressures. The Nasdaq gapped up at the open more than 120 points, but sold off sharply, dropping below 4000 intra-day.
December’s NAPM figure came in at 55.5%, and that was slightly lower than November’s 56.2%. The prices paid component of the report, however, showed an increase, and that helped re-kindle inflation fears. The thought of potential Fed action in February was enough to fuel the sell-off in stocks.
By the end of the session, though, Technologies and Internets rallied and helped the Nasdaq fight its way back to a record close. The Dow and S&P 500 failed to rally and closed down for the day. According to preliminary figures, the Dow fell 140.23 to 11356.89, the Nasdaq soared 61.49 to 4130.80, and the S&P 500 sank 14.08 to 1455.17.
Monday’s top-performing groups included Internets [$GIN.X>$GIN.X], up 8.7%, computer software [$CWX.X>$CWX.X], up 2.0%, semis [$SOX.X>$SOX.X], up 1.3%, and airlines [$XAL.X>$XAL.X], up 0.7%.
Groups under pressure Wednesday included broker dealers [$XBD.X>$XBD.X], down 4.0%, banks [$BKX.X>$BKX.X], down 4.5%, and oil services [$OSX.X>$OSX.X], down 5.9%.
The Nasdaq’s resiliency was evident Monday with strong performances by some of its traditional leaders. Old-guard techs that helped the Nasdaq finish solidly higher included Intel [INTC>INTC], Oracle [ORCL>ORCL], Amgen [AMGN>AMGN], and Vitesse Semiconductor [VTSS>VTSS].
The biggest Nasdaq gains, however, came from the Internets. CMGI [CMGI>CMGI] was the leading Net stock of the day, moving to all-time highs after positive comments from Henry Blodgett of Merrill Lynch. Blodgett had given the Internet incubator a $300 price target last week, and his positive comments Monday helped boost the stock 49 3/4 to 326 5/8 for the day.
Big Net gains were also posted by Amazon [AMZN>AMZN] up 13 1/4 to 89 3/8, America Online [AOL>AOL] up 6 11/16 to 82 9/16, Goto.com [GOTO>GOTO] up 18 1/4 to 77, Internet Capital Group [ICGE>ICGE] up 30 to 200, and Yahoo [YHOO>YHOO] up 42 5/16 to 475. Yahoo was particularly strong after a $600 price target announcement from First Union Securities.
Interest-rate fears hurt the banking group. Large money-center and regional banks buckled Monday on fears of potential February Fed rate hikes. Dragging the bank index [$BKX.X>$BKX.X] down 4.5% were Chase Manhattan [CMB>CMB], down 4 11/16 to 73, Bank of New York [BK>BK], down 3 1/16 to 36 15/16, and US Bancorp [USB>USB], down 1 5/16 to 22 1/2. JP Morgan [JPM>JPM] and Wells Fargo [WFC>WFC] both hit two-month lows and closed down 5 3/16 and 1 5/16, respectively.
Upcoming economic news includes Tuesday’s December construction spending report which analysts expect to show a 0.2% increase over November. Fed watchers look ahead to Friday when unemployment numbers, average hourly wages, and non-farm payrolls will be released.