Rate Concerns Weigh On Stocks But Nasdaq Moves To New Highs
A late session rally by technologys and Internets sent the Nasdaq to a record high for the fifty-fifth time of 1999 while the broader market drifted lower amid poor internals. Worries about Tuesday’s Federal Reserve meeting and edginess about future Fed policy created enough anxiety to keep both the Dow and S&P 500 in negative territory Monday.
According to preliminary numbers, the Dow sank 113.16 to 11144.27, the Nasdaq gained 30.38 to 3783.89, and the S&P 500 lost 2.96 to 1418.09.
Monday’s strongest performing groups were biotechology [$BTK.X>$BTK.X], up 1.2%, pacific high-tech [$PSE.X>$PSE.X], up 1.3%, Internets [$GIN.X>$GIN.X], up 1.4%, and semiconductors [$SOX.X>$SOX.X], up 3.1%.
Groups under pressure Monday included, forest and paper products [$FPP.X>$FPP.X], down 2.5%, transportation [$TRX.X>$$TRX.X], down 3.5%, and chemicals [$CEX.X>$CEX.X], down 5.0%.
Internet companies received a double-boost from the mainstream press, as Time magazine named Amazon founder Jeff Bezos as “Person of the Year.†Amazon rose 2 15/16 to 97 for the day. Also, Barrons ran a story on Morgan Stanley Internet analyst Mary Meeker, focusing on her views about the future of the Internet.
Comments by Meeker, the so-called “Queen of the Net,†may have helped rally some of the big name Internets in Monday trading. Yahoo [YHOO>YHOO], Verisign [VRSN>VRSN], and B2B incubator Internet Capital Group [ICGE>ICGE] each gained more than 19 points and posted all-time high closes.
The Dow continued to show the market’s sector rotation with General Motors [GM>GM], United Technologies [UTX>UTX], and McDonalds [MCD>MCD] performing solidly. Last week’s Dow stars were among the weakest Dow stocks Monday, with Microsoft [MSFT>MSFT], Alcoa [AA>AA], Johnson & Johnson [JNJ>JNJ], and Du Pont [DD>DD] all weighing on the average.
Broker/dealer stocks remained mixed Monday with Morgan Stanley DW [MWD>MWD] rising sharply higher intraday after announcing a 2-for-1stock split as well as a hike in the company’s dividend. Morgan Stanley finished up 15/16 at 129. Online brokers Schwab [SCH>SCH], down 2 13/16, and E*Trade [EGRP>EGRP], down 1 1/8 to 28 15/16, reflected the concerns that linger about rising interest rates and how rate hikes might hurt online trading.
Leading the technologys higher Monday again were Qualcomm [QCOM>QCOM], up 11 13/16 to 466 13/16, and Oracle [ORCL>ORCL], up 5 5/8 to 96 5/16. Both companies posted all-time high closes, and Oracle announced a 2-for-one stock split.
Traders now look ahead to Tuesday’s FOMC meeting, but Fed watchers remain convinced that the Fed will not take any action on rates because of Y2K concerns.