Microsoft And Intel Power Averages Higher
Despite a Wednesday morning sell-off that took the Nasdaq down nearly 70 points, stocks bounced back into positive territory at mid-day in a rally led by Microsoft [MSFT>MSFT] and Intel [INTC>INTC]. What made the turn-around impressive was that it occurred against a backdrop of inflationary worries and a sales growth warning from Cisco.
Economic reports out Wednesday confirmed that the economy remains red-hot. November industrial production rose 0.3% which was ahead of the expected 0.2% increase, and capacity utilization came in at 81% compared to the anticipated 80.7%. These figures show the economy remains strong, and many analysts believe it gives the Fed more rationale for raising rates in February.
A pre-market news flash stating Cisco [CSCO>CSCO] had warned in a 10Q filing that net sales could possibly grow at a slower rate also weighed on the Nasdaq at the open. By mid-day, however, the bulls roared back, allowing all three major indexes to finish positive for the day. In addition to the technologys, cyclicals showed strength throughout the day.
According to preliminary figures, the Dow rose 65.15 to 11225.32, the Nasdaq gained 50.27 to 3621.93, and the S&P 500 is up 9.86 to 1413.03.
Among the top-performing groups Wednesday were oil services [$OSX.X>$OSX.X], up 5.9%, gold and silver [$XAU.X>$XAU.X], up 3.7%, computer technology [$XCI.X>$XCI.X], up 3.6%, forest and paper products [$FPP.X>$FPP.X], up 3.0%, and semis [$SOX.X>$SOX.X], up 2.7%.
Groups showing the most weakness included Internets [$GIN.X>$GIN.X], down 1.6%, banks [$BIX.X>$BIX.X], down 1.6%, and broker/dealers [$XBD.X>$XBD.X], down 1.3%.
Shares of Microsoft [MSFT>MSFT] paced the Dow and Nasdaq and soared 9 9/16 to 108 1/4. Buzz about the upcoming Windows 2000 along with rumors of a possible settlement with the Department of Justice helped Microsoft close at an all-time high.
Dow components that joined Microsoft in moving the average higher were Intel [INTC>INTC] up 6 1/2 to 78 15/16, Alcoa [AA>AA], up 4 3/16 to 78 7/8, International Paper [IP>IP], up 1 9/16 to 55 7/8, and Merck [MRK>MRK] up 1 13/16 to 71 1/2.
Also leading the technology sector higher Wednesday was Oracle [ORCL>ORCL], up 13 7/16 to 90 3/8, after a stellar earnings announcement Tuesday that beat both analyst and “whisper†estimates.
Within the Goldman Sachs Internet index, stocks were mixed. Biggest dollar gainers in the index included RealNetworks [RNWK>RNWK], up 5 1/2, Inktomi [INKT>INKT], up 5 3/16, and CheckPoint [CHKP>CHKP], up 7 9/16. Biggest dollar losers on the day included Yahoo [YHOO>YHOO], down 5 1/4, CMGI [CMGI>CMGI], down 6, and eBay [EBAY>EBAY], down 4 5/8.
After trading sharply lower in recent sessions the Linux-related group bounced back Wednesday. VA Linux [LNUX>LNUX], Red Hat [RHAT>RHAT], Andover.net [ANDN>ANDN], Perle Systems [PERL>PERL] all finished higher. However, Corel [CORL>CORL], fell 6 7/16 to 22 11/16 on news that the company’s CFO would leave the software company.
Due out Thursday are the trade deficit figures which will be released at 8:30 AM ET.