GDP Soars; Stocks Off
More evidence of a booming U.S. economy pressured stocks Friday despite a
mild rebound in the semiconductor group.
The Nasdaq fell 4.7%, the S&P
500 2.0%, and the Dow 0.7%.
Second-quarter GDP growth came in at 5.2%, which was significantly above the
3.5% that analysts had expected. Stocks fell across the board from the open,
attempted a midday comeback, but then sold off heavily into the close.
“I am not surprised by today’s market at all. The GDP number was not the
number that I wanted to see, and I don’t think anyone on Wall Street wanted to
see it either,” said Barry Hyman, Chief Market Strategist, A. Ehrenkrantz
King Nussbaum.
“It was a GDP number showing significantly higher growth than the Fed’s
goal of 3 to 3.2%.You throw on top of that an already-crumbling growth market in
major growth sectors, and you continue the Nasdaq decline. Right now, we’re
approaching a 15% drop already from the recent top. How fast it occurs. But
that’s the Nasdaq,” he added.
Volume remained moderately heavy with 1.76 billion shares trading on the
Nasdaq and 979 million shares changing hands on the NYSE. Nasdaq volume was
slightly above Thursday’s level, while NYSE volume was about 4% lighter than
Thursday.
Chips located positive soil in the wake of a sharp tumble over the last few days.
According to preliminary numbers, the Nasdaq gave back 172.24 to 3662.99, the
Dow fell 74.96 to 10,511.17, and the S&P 500 slipped 29.71 to 1419.91.
Sectors that avoided the selling were gold and silver
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1.0%, semiconductors
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up 0.5%.
Sectors under the most pressure were technology
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Internets
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6.4%.
Notable names caught in the downturn were Intel
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129 1/8, JDS Uniphase
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down 4 5/8 to 102, and Cisco
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The winning Dow stocks that helped hold the average to less than a 1% loss
were Coca-Cola
(
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Johnson
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Dow losers in addition to Intel, were Alcoa
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Express
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Commenting on the rough week for stocks, Frank Gretz, Market Analyst, Shields
& Co. said, “This is a tough market. Indeed, in many ways it seems the
toughest market we’ve ever seen. There’s this "they look like they’re going up,
then they go down" thing, and there’s this "they look like they’re going down,
and they rally" thing going on. There also never seems to be any real follow-through, which, for a trend player, is hell.”
Looking ahead, the Chicago Purchasing Managers Index will be released at
10:00 AM ET on Monday. Street estimates look for a reading of 56.8.