From Fear To Confidence
Stocks took a breather Friday following a week that saw dramatic gains by the
major averages after the Fed’s surprise rate cut on Tuesday. Techs led the
way as the Nasdaq booked a 14% overall gain for the week. The major averages on
Friday, however, edged lower with the Nasdaq down 0.9%, the Dow down 1.0%, and
the S&P 500 down 0.8%.
Better-than-expected earnings reports from several high-profile techs like
Apple and Microsoft combined with a flurry of analyst upgrades to give the
impression that things were clearly not as bad as they had seemed just a week or
so ago.
Getting the Fed rate cut just added more confidence to the equation since the
general consensus is that the Fed’s actions seemed to specifically focus on
boosting stocks.
Volume remained strong, as 2.5 billion shares traded on the Nasdaq and 1.3
billion shares crossed hands on the NYSE.
A constructive sign for stocks was the fact that all three major averages
closed above their respective 50-day moving averages. Many traders seemed to
agree that the strength in the bounce could potentially create a lasting
intermediate-term rally.
"I think we are in the process of the market finally responding to all
the Fed easing, and finally having assimilated the new lowered expectations in
earnings. So we’re seeing some positive responses when companies beat or
slightly exceed their new lowered estimates," said Robert Wibbelsman,
Portfolio Manager, Strome Investment Management.
"I think it’s going to result in a somewhat substantive rally which
could last as long as another couple of months. Then I do think that in late
summer or fall we will have another shot on the downside, and then after that I
think the market’s going to be okay," he added.
Top sectors included oil services
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oils
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On the weak side were Internets
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down 2.6%, and biotechnology
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down 2.2%.
After the bell on Thursday, Microsoft
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analyst estimates by a penny. Microsoft gained a respectable .96 on double
average volume to finish the week at 69.04. Microsoft traded as high as 71.10
intraday which was the highest it has traded since Nov. 2000.
Also strong in the software realm was Veritas Software
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gained 2.95 to 67.20 on heavier-than-average volume.
Also in the techs, an upgrade on PMC Sierra
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3.57 to 44.97 on heavier-than-average volume. Also strong in tech-land were JDS
Uniphase
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Joining Microsoft as top Dow performers were Alcoa
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up 1.7%, and Philip Morris
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3.4%, and Merck
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