Compaq Crushes Tech
After gapping up at the open Wednesday, technology stocks sank throughout the
session and into the close, leaving the Nasdaq off by 3.7%. An earnings warning
from Compaq
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The apparent end of the election battle simply failed to bring in the buyers,
and the S&P 500 slipped 0.8% for the day. The Dow was the lone bright spot,
rising a scant 0.3%.
Volume remained on the lighter side, although Nasdaq volume did increase
about 5% above Tuesday’s level, with 2.0 billion shares changing hands. NYSE
volume picked up by 9%, as 1.18 billion shares traded.
In economic news, November’s retail sales fell 0.4%, which was significantly
lower than the 0.3% increase analysts had expected. Most analysts commented that
the recent economic numbers definitely point toward at least a neutral inflation
bias by the Fed at its Dec. 19 meeting.
“It’s hard to say for certain how much of the Bush Presidential victory
had already been priced into the market, but I think you’re getting a little
taste of that right here already prior to Gore’s concession,” said Scott
Cummings, General Partner, Agile Asset Management.
“I think we still have a market that is going to have to wrestle with an
economic slowdown and not knowing how slow is slow. There are also a lot of
pre-announcements still ahead of us in the tech environment. My call, once we
get past next Tuesday, is that the tech wreck is not over, and that new lows are
likely to be seen sometime in the next 6 to 8 weeks,” he added.
According to preliminary numbers, the Nasdaq fell 108.79 to 2822.98, the Dow
gained 26.17 to 10,794.44, and the S&P 500 eased 11.08 to 1360.10.
Top sectors were drugs
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2.0%, and health care
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On the downside were gold and silver
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semiconductors
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Among the biggest tech disasters was recent leader Sun Microsystems
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which fell 2 1/8 to 31 3/4 to its lowest level since Nov. 1999.
On the opposite side of the spectrum, Phillip Morris
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40 13/16 to its highest level since July 1999. Along with the pharmaceutical
group, tobaccos are continuing in a Bush-rally mode.
Joining Phillip Morris as top Dow performers were J.P. Morgan
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3.6%, AT&T
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down 3.6% and Hewlett Packard
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If you want a partial explanation of why technology was slammed in October,
just look at who was dumping tech during that month. Fund giant Fidelity raised
its Magellan cash levels from 3.7% at the end of September to 6.9% by the end of
October. It also lowered the fund’s weighting in tech from 29.2% to 25.1%. For
all stock funds, cash levels are at 6%, which is the highest level since
November 1998.
Looking ahead, the November Producer Price Index will be released on Thursday
at 8:30 AM ET. Analysts expect a 0.2% increase in the PPI and a 0.1% increase in
the core rate.