Dow Posts Record Close But Nasdaq Falters
Stocks powered ahead into record high levels Tuesday against a backdrop of stronger than expected economic numbers that suggest the economy remains in over-drive. Cyclicals and business-to-business Internets led the rally Tuesday, but a late-session sell-off of technologies and Internets pulled the Nasdaq into negative territory by the close. The Dow, however, managed to finish the day at an all-time high.
The Conference Board reported Tuesday that consumer confidence rose in December to 141.4, its highest level in 31 years. In addition, November existing home sales increased 6% to 5.09 million homes while the street only expected 4.9 million sales. The strong economic figures have led many analysts to conclude that a February rate hike might be inevitable.
While Dow and Nasdaq traded in record territory for most of the day, a late-session Nasdaq sell-off prevented the Nasdaq from closing above the 4000 level. According to preliminary numbers, the Dow gained 85.63 to 11476.71, the Nasdaq slid 3.29 to 3972.09, and the S&P 500 dropped 0.57 to 1457.66
Best performing groups Tuesday included forest and paper products [$FPP.X>$FPP.X], up 4.3%, biotechs [$BTK.X>$BTK.X], up 2.1%, chemicals [$CEX.X>$CEX.X], up 1.8%, and cyclicals [$CYC.X>$CYC.X], up 1.8%.
Weakest groups for the day were broker/dealers [$XBD.X>$XBD.X], down 0.7%, drugs [$DRG.X>$DRG.X], down 1.5%, and health care [$HCX.X>$HCX.X], down 1.6%.
Drugs continued to face tax-loss selling as well as uncertainty about future health care reforms. Among drug stocks on the downside were Johnson and Johnson [JNJ>JNJ], down 1 13/16 to 95 15/16, Merck [MRK>MRK ], down 3/4 to 69 3/4, Pfizer [PFE>PFE], down 1 1/8 to 33 3/8, and Warner Lambert [WLA>WLA], down 1 3/16 to 85 1/8.
Among Dow winners were Alcoa [AA>AA], Union Carbide [UK>UK], United Technologies [UTX>UTX], and Minnesota Mining and Manufacturing [MMM>MMM]. Weak Dow components included Intel [INTC>INTC], and Johnson & Johnson [JNJ>JNJ].
In the Internet arena, business-to-business e-commerce companies again posted some extraordinary intraday gains before selling off toward the end of the session. Among the B2B winners that avoided the sell-off were Purchase Pro [PPRO>PPRO] up 16 3/16 to 158 3/8, Free Markets [FMKT>FMKT] up 23 1/4 to 292 1/4, Broadvision [BVSN>BVSN] up 4 5/8 to 163 1/8 and VerticalNet [VERT>VERT] up 30 5/8 to 172.
Shares of Commerce One [CMRC>CMRC] traded as high as 331 before selling off sharply to close down 6 7/16 at 250. Before the late afternoon sell-off, Commerce One came within 2 points of the projected price target a New York analyst placed on the stock last week.
Traders now look ahead to Wednesday’s release of the November index of leading economic indicators which is due out at 10:00 AM ET.