Nasdaq Spooks Bears
Technology stocks closed out October with a bang Tuesday, as the Nasdaq
surged 5.6% higher on heavy volume. Internets, optical networkers and chip
makers led the way, as the enthusiasm spread to the broader market as well.
The S&P 500 added 2.2%, as strength in retailers, telecom, and financials
moved the S&P 500 to within 10 points of its 50- and 200-day moving averages.
Most analysts agree that if the Nasdaq can now capture its 200-day moving
average, then that would confirm a low has been established.
Both Nasdaq and NYSE volume increased by about 5% from Monday’s levels, as
2.13 billion shares changed hands on the Nasdaq and 1.35 billion shares traded
on the NYSE.
Consumer confidence for October came in at 135.2 which was weaker than the
140.0 that analysts expected. Higher oil prices and an uneasy stock market may
have contributed to the decline suggests that an economic slowdown may be at
hand.
New home sales, on the other hand, came in at 946,000, which topped estimates
of 894,000 and showed that the economy remains strong despite the fact that
consumers may be worried. The housing number helps make the case that the Fed’s
"soft-landing" scenario may still be intact.
"First of all, every year the techs come under pressure, and before the
whole dot.com craze, it used to be the semiconductors. It seems like we’ve seen
this movie every year, where just when you think they’re going to fall apart and
go away, they actually snap back and come on pretty strong," said Charles
Payne, President, WallStreetStrategies.com.
"Really the last bastion of technology that wasn’t hit was the fiber
optics, and I think it finally got to the point where a whole lot of investors
recognized that maybe technology in general was oversold," he added.
According to preliminary numbers the Nasdaq soared 178.15 to 3369.55, the Dow
added 135.37 10,971.14, and the S&P 500 rose 30.73 to 1429.39.
Top sectors of the day were Internets
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semiconductors
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5.3%.
On the downside were drugs
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down 0.7%, and gold and silver
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Cisco Systems
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downgrade and promptly gained 5 13/16 or 12% to 53 7/8 to help power the Nasdaq
bounce.
Additional tech winners included Newport
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up 17%, JDS Uniphase
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Looking to Wednesday, the National Association of Purchasing Managers index
is due out at 10:00 AM ET, and Street consensus is for a 49.6% reading.