Nasdaq Rockets Above 3900 After No Move By Fed
Tuesday’s FOMC meeting saw the Federal Reserve leave rates unchanged and also leave the policy bias at “neutral.†Stocks soared on the news, with Internets, technologys, and financials leading the way. With additional Fed moves highly unlikely until the February policy meeting, stocks found more room to run.
In addition to the lack of Fed action, upgrades of several Internet and technology companies also helped send the Nasdaq into record territory Tuesday. According to preliminary numbers, the Nasdaq soared 127.17 to 3911.04, the Dow gained 56.27 to 11200.54, and the S&P 500 rose 15.36 to 1433.45. The Nasdaq’s gain was a record single-day point gain as well as the fifty-sixth record close of 1999.
Strongest groups of the day included biotechnology [$BTX.X>$BTX.X], up 6.6%, Internets [$GIN.X>$GIN.X], up 6.6%, semis [$SOX.X>$SOX.X], up 4.4%, and oil services [$OSX.X>$OSX.X], up 3.0%.
Groups on the downside for the day included gaming [$GAX.X>$GAX.X], down 1.0%, drugs [$DRG.X>$DRG.X], down 1.0%, and transportation [$TRX.X>$TRX.X], down 2.4%.
The neutral Fed stance sent financials higher. After a five-week slide that started in mid-November, the banking index [$BKX.X>$BKX.X] bounced up a solid 2.5% in Tuesday trading. Leading the sector for the day were Bank One [ONE>ONE], up 3 13/32 to 33 3/8, Chase Manhattan [CMB>CMB], up 2 3/4 to 75, First Union [FTU>FTU], up 1 1/16 to 33 1/2, and Bank of America [BAC>BAC], up 1 3/8 to 49 3/8. FTU, BAC, and ONE bounced sharply back from the 52-week lows each hit Monday.
Pacing the Nasdaq were shares of Qualcomm [QCOM>QCOM] which moved to an all-time high on a price-target upgrade to 570 by JP Morgan. Qualcomm remains one of the top Nasdaq performers this year and ended up 30 1/16 to 496 7/8 for the day.
Among rocketing Internets, CMGI [CMGI>CMGI] hit an all-time high on an upgrade from Merrill Lynch Internet analyst Henry Blodgett. The former Oppenheimer analyst set a 12- to 18-month price target of 300 for CMGI, and the stock has responded extremely well, rising 47 13/16 to 270.
Internets hitting new highs Tuesday also included Verisign [VRSN>VRSN], Yahoo [YHOO>YHOO], DoubleClick [DCLK>DCLK], and Inktomi [INKT>INKT].
The business-to-business e-comerce sector was also red-hot on Tuesday. Among leading B2Bs hitting or closing at all-time highs were Internet Capital Group [ICGE>ICGE], Commerce One [CMRC>CMRC], Ariba [ARBA>ARBA], VerticalNet [VERT>VERT], and viaLink
[IQIQ>IQIQ].
Free Internet access was also a theme in Tuesday’s session. Juno Online Services [JWEB>JWEB] soared for the second day in a row Tuesday on an upgrade from Paine Webber. The company, which provides free e-mail services to 2.5 million subscribers, has announced a strategy to become a lower cost or free alternative Internet service provider (ISP) to AOL [AOL>AOL], Mindspring [MSPG>MSPG], or Earthlink [ELNK>ELNK]. The market has reacted positively to the $9.95 per month or free subscription rate, sending the stock up 37 3/4 to 66 3/4.