Digesting Recent Gains
Telecom woes from WorldCom overshadowed some favorable economic news
Wednesday, sending stocks lower, with the Nasdaq shrinking 1.0% and the Dow and
S&P 500 easing 0.6% each. Analysts felt that some consolidation was in order
given the market’s recent round of healthy gains.
The National Association of Purchasing Managers report came in at 48.3%,
which was less than the 49.6% analysts had expected. The number marked the third
monthly decline in a row and serves as yet more evidence that the economy is
slowing.
Volume remained fairly strong with 2.0 billion shares trading on the Nasdaq
and 1.19 billion shares trading on the NYSE.
“I think the market’s trying to put in a bottom here. I think we should
try to work our way higher over the next couple months, but I don’t see it as
being a strong or broad rally,” said Peter Marin, Portfolio Manager,
Superior Capital Management.
“I think the tech stocks probably have a little more work to do, but I
don’t think we’ll see a repeat of the last couple of years when in November and
December the tech stocks rallied really strongly,” he added.
According to preliminary numbers, the Nasdaq the Dow fell 71.67 to 10,899.47,
the Nasdaq lost 36.19 to 3333.44, and the S&P 500 slipped 8.16 to 1421.24.
Top sectors of the day were oil services
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$OSX.X |
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oils
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On the downside were forest and paper products
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semiconductors
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4.5%.
The latest casualty in telecom was WorldCom
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fourth quarter earnings warning and said it would create a tracking stock for
its long distance business. WCOM closed down 4 3/4 to 19.
Internets peaked back up after months of relentless selling action. Leading
the Goldman Sachs Internet Index were CMGI
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up 9.7%, AtHome
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Looking ahead, the third quarter productivity report will be released on
Thursday at 8:30 AM ET, and analysts expect an increase of 3.2%. Productivity
increases have been the key to the recent economic boom which has relied on
productivity gains to offset the inflationary pressures a higher-than-average
GDP might generate.
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