Nasdaq Comeback Fails To Stay Positive
As an encore to Tuesday’s 239-point drop, the Nasdaq sank another 166 points in early Wednesday trading before staging a remarkable comeback that helped the Nasdaq turn positive late in the day. The Nasdaq was unable to remain in positive territory and edged lower by the close. The Dow, however, held on to early gains and managed to erase about half of Tuesday’s 359-point decline.
A weak bond market drove the 30-year bond yield up to 6.63% which will likely keep technologys and financials on edge in the coming sessions. Traders were impressed by the Nasdaq’s resilience Wednesday, but they wonder how the Nasdaq can possibly hold up if rates continue to rise.
According to preliminary numbers, the Dow gained 124.72 to 11222.65, the Nasdaq slid 24.12 to 3877.57, and the S&P 500 added 2.69 to 1402.11.
Rotation out of technologys and into previously neglected groups continued Wednesday with big gains by companies like Anheuser Busch [BUD>BUD], up 3 1/4 to 73 7/16 and Quaker Oats [OAT>OAT], up 2 1/16 to 64 1/16. Likewise, utilities also showed renewed strength.
Additional groups on the upside Wednesday were forest and paper products [$FPP.X>$FPP.X], up 3.8%, chemicals [$CEX.X>$CEX.X], up 3.4%, health care [HCX.X>HCX.X], up 2.3%, and drugs [$DRG.X>$DRG.X], up 2.1%.
The weakest groups Wednesday included broker/dealers [$XBD.X>$XBD.X], down 2.6%, software [$CWX.X>$CWX.X], down 2.9%, and Internets [$GIN.X>$GIN.X], down 3.5%.
After a tough 1999, the drug group showed new signs of life Wednesday. Leading the group higher were American Home products [AHP>AHP], up 1 3/4 to 41 5/8, Schering Plough [SGP>SGP], up 2 3/16 to 40 3/16, and Merck [MRK>MRK], up 2 1/2 to 67 3/4.
The Dow battled back from Tuesday’s big sell-off and was led higher by Boeing [BA>BA], Alcoa [AA>AA], Home Depot [HD>HD], Exxon [XOM>XOM], Disney [DIS>DIS], and IBM [IBM>IBM] which were each up more than 4%.
Fed watchers look ahead to Friday when unemployment numbers, average hourly wages, and non-farm payrolls will be released.