Nasdaq Rises…Despite Chip Gloom
Despite a gloomy forecast for the
chip sector from a high-level analyst, the Nasdaq managed to shrug off the
negativity Monday and post a respectable 1.5% gain. The Dow and S&P 500
joined the Nasdaq to the upside, adding 0.5% and 0.8%, respectively.
Volume remained light, with a meager
1.4 billion shares trading on the Nasdaq and 995 million shares trading on the
NYSE.
Chip analyst Dan Niles of Lehman
Brothers offered a sobering assessment of the chip sector, suggesting a scenario
that would be comparable to the early to mid 1980s when the semis took nearly
three years to iron out their imbalances.
Analysts following the macro front,
however, found solace in the fact that maybe, just maybe, we are seeing some of
the darkest before the dawn.
“This week, the emphasis will
evolve away from first quarter earnings and economic data and toward the Federal
Reserve Bank. Our short-term
opinion has improved, and stocks are in the final declining stage,”
said Paul Rabbitt, President,
RabbittAnalytics.com.
“Two thirds of the US economy is
consumer-driven. Due to the colossal bear market-caused decline in wealth, the
loss of jobs reported last week, and the PG&E bankruptcy, the Fed now has
been given ‘cover’ to cut rates. It is unlikely to wait until the next FOMC
meeting in May to stimulate the economy again,” he added.
According to preliminary numbers, the
Nasdaq gained 25.38 to 1745.74, the Dow added 54.06 to 9845.15, and the S&P
500 lifted 9.16 to 1137.59.
Top sectors included Internets
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up 5.0%, biotechs
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2.7%.
On the downside were retail stocks
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down 1.6%, and semiconductors
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Cisco Systems
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the former tech giants that turned it around Monday. Cisco rose .87 or 6.3% to
14.50.Â
Amazon
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surprising bounce Monday following word that the company would likely post a
smaller-than-expected loss for its first quarter. Shares of Amazon jumped .86 or
33% to 11.15 on triple average volume.
eBay
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rose 5% and 7%, respectively to help put some juice into the decimated Internet
group.
Other tech winners included Comverse
Technologies
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5.66 to 67.00, and Veritas Software
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The top Dow stock was Alcoa
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which gained 3% while Home Depot was the weakest, falling nearly
4%.  Â
Looking ahead, the Producer Price
Index for March will be released Thursday at 8:30 AM ET. Analysts expect a 0.1%
increase in both the PPI and the PPI core rate.