Dow Ready To Explode?
Blue chips reigned supreme Thursday thanks to strength in cyclicals, energies
and select financials while the Nasdaq slipped 1.2% to give back some of
Wednesday’s gains. The Dow added 0.6% and briefly touched its highest level
since March 9 while the S&P 500 rose 0.5%.Â
To credit the Nasdaq, though, was the fact it did manage to hold slightly
above its 50-day moving average. Nasdaq volume was tame, with slightly over 2
billion shares changing hands. NYSE volume was 1.27 billion shares.
Initial jobless claims jumped 18,000 to 408,000 and that news provided more
support for the case for more rate cuts at the Fed’s May meeting. Obviously Alan
Greenspan’s concerns last year about too tight of a labor market have vanished
along with thousands of jobs. The 4-week moving average remains in a steep
uptrend.
The fact that the Fed seems whole-heartedly behind preventing a prolonged
economic downturn offers analysts hope for an earnings rebound and an optimistic
outlook for stocks going forward.
“We’re seeing more improvement in stock prices, and I think that’s coming about by a more reassured investor looking not
so much at the next couple of quarters of earnings but actually out to next year’s earnings
potential,” said Joe Battipaglia, Chief Investment Strategist, Gruntal &
Co.Â
“The fact that the Federal Reserve clearly is most concerned with the economy’s well being puts us
in a very good position from a market perspective. Since the Nasdaq was so grossly oversold and the S&P was down by 28%, those kinds of corrections are
commensurate with a slowdown in the economy and suggest to me that we’ve had a bottom and it’s behind us
now,” he added.
According to preliminary numbers, the Dow rose 67.15 to 10,692.35, the Nasdaq
slipped 24.84 to 2034.96, and the S&P 500 added 5.77 to 1234.52.
Top sectors were gold and silver
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up 5.4%, transportation
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up 2.6%.
On the downside were computer technology
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semiconductors
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Among tech standouts was PeopleSoft
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after announcing earnings of 11 cents per share that beat Street estimates by 2
cents. The stock traded more than double its average volume.
FuelCell Energy
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heavier-than-average volume. FCEL’s close puts it at a new 2-mmonth high.
In other earnings news, Qualcomm
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share, meeting expectations, but the company warned about future quarterly
shortfalls. Qualcomm finished the day down 4.93 to 58.05.
Pacing the win for the Dow were Alcoa
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up 3.5%, Du Pont
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Hewlett Packard
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and 2.7%, respectively.
Looking ahead, the first quarter GDP number will be released Friday at 8:30
AM ET, and analysts expect an anemic reading of just 1.0%.