Knock Your SOX Off
Better-than-expected earnings from IBM helped convince technology buyers that
the news of the death of technology may have been greatly exaggerated, and that
was enough to spur a 3.2% Nasdaq rally Thursday that brought the Naz to within a
few points of its 50-day moving average. Semiconductors led the charge which
even spilled over into the beleaguered Internets.
Bond traders swirled rumors that the economy was slowing even faster than had
been expected which seemed to indicate that the Fed may lean toward a 50 basis
point cut at its Jan. 31 meeting after all. The talk was enough to motivate the
blue chips, as the Dow rose 0.9% and the S&P 500 lifted 1.4%.
Volume remained healthy at 2.52 billion shares on the Nasdaq and 1.36 billion
shares on the NYSE. Nasdaq volume was about 10% below Wednesday’s level while
the NYSE was about the same.
“I’m very encouraged by the market today. It’s all IBM. Just the fact
that IBM stayed with their guidance and didn’t cut anything is encouraging. They
said how strong their server business is. They feel good about the hardware
side. They said the server side was good and software was in line, and that
tells us that we don’t have a disaster in the computer business,” said
Brian Finnerty, Managing Director, C.E. Unterberg Towbin:
“So things are not looking as bad right now as everybody thought, and I
cautiously say that I think we’re in pretty good shape here,” he added.
According to preliminary numbers, the Nasdaq rose 85.68 to 2768.46, the Dow
gained 93.53 to 10,677.87, and the S&P added 18.50 to 1347.97.
Top sectors were semiconductors
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On the weak side were retailers
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down 1.8%, and oil services
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Among tech winners was Hewlett Packard spin-off Agilent
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to a new 6-month high out of a 5-month base on heavy volume. For the day,
Agilent rose 5 5/8 to 67 9/16.
Also impressive was JDS Uniphase
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to close back above its 50-day moving average for the first time since
September.
Semis that rocked were Advanced Micro
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up 14%, Micron
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The four horsemen of the Nasdaq were all higher, with Intel
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5%, Microsoft
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up 8%. Good earnings reports after the bell by Microsoft and Sun had each
trading higher in after-hours activity and could give stocks more firepower for
Friday.
Joining Microsoft and Intel at the top of the Dow were IBM
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and Hewlett Packard
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falling 6%.
Looking ahead, the next big economic report due out is the Index of Leading
Economic Indicators for December which will be released Monday at 10:00 AM ET.
Street estimates look for a 0.4% decrease.