Disaster Averted
Following an intraday plunge of 4% that put it at Dec.1998 levels, the Nasdaq
managed to stage a brilliant reversal rally in the final two hours Friday to
finish up 0.7% for the day. Even Sun Microsystems booked a flat finish despite
its ominous earnings warning that weighed on technology from the open.
The S&P 500 also bounced late in the session and pared its loss to just
0.6% after it briefly hit a two-year low. With the S&P 500 having drifted
more than 20% below its March 2000 highs, it earned the formal definition of a
bear market. In other blue chip news, the Dow lost 0.8%.
Nasdaq volume eased up by about 10% from Thursday’s level, but a still hefty
2.17 billion shares changed hands. NYSE volume was 1.21 billion shares.
“There’s no doubt Nasdaq is oversold and we think it is close to making
a trading low too. How oversold? Well, a -4 standard deviation reading on Nasdaq
would correspond to 2050 versus yesterday’s 2245 close. Recall that the level of
excess/overbought that we reached on March 10, 2000 was +4 standard deviations,”
said Vice President, Arnhold and S. Bleichroeder.
“However, we’re staying super cautious on the sector. We don’t think
it’s a stretch to say that this may be the one time when you want to miss the
first 10% on a potential low–at least until a stock can ignore some bad news,”
he added.
Top sectors were biotechs
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up 3.8%, Internets
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On the weak side were oil services
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In a battle of dueling analysts, Deutsche Bank Alex Brown lowered its rating
on Qualcomm
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50 1/8 before reversing following an upgrade and a 100 dollar price target from
Morgan Stanley. Qualcomm ended the day down just 5 1/8 to 61 13/16 on five times
its average volume.
Big-cap techs that rallied strong and finished up more than 5% included JDS
uniphase
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Yahoo!
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In addition to Qualcomm a comeback award goes to BEA Systems
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which beat earnings estimates but traded as low as 35 1/2 before rallying to a
gain of 2 1/8 to 44 1/16 on nearly triple average volume.
Dow winners were Eastman Kodak
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2.2%, and GM
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Looking ahead, the January existing home sales report will be released at
8:30 AM ET on Monday. Analysts expect a figure of 5 million homes.