Semi-Scorcher
Stocks gapped up at the open Wednesday following a string of good earnings
and some inflation-friendly economic news, but lingering concerns over Intel led
to an unsettling fade for the Nasdaq toward the end of the session. Despite the
negative feel of the day, the Nasdaq did book a respectable 2.4% gain that put
it just 85 points below its 50-day moving average.
Although Intel slipped 2.7%, the semiconductor group gained more than 6% and
remained about 8% above of its 50-day moving average. Intel weighed on the Dow,
which posted a 0.6% loss, and the S&P 500 was slightly higher with a 0.2%
gain.
Nasdaq volume surged 37% above Tuesday’s level, as 2.8 billion shares changed
hands. NYSE volume lifted by about 18% from Tuesday, with 1.3 billion shares
trading.
December’s CPI showed a 0.2% increase, which was on par with expectations, while the core CPI increased just
0.1% which was lower than the 0.2% increase analysts expected.
Industrial production fell 0.6%, which was a greater decline than the 0.3%
decrease analysts expected. The anemic production number lends support to the
camp that sees the Fed lowering interest rates by 50 basis points when it meets
on January 31.
“We certainly have a terrific Nasdaq market today after taking a
breather for a day following the three days up in a row last week, and I think a
lot of that is predicated on the fact that Intel can come out with earnings and
talk about the future and still be perceived as overdone or a bargain at these
levels,” said Art Hogan, Chief Market Analyst, Jeffries & Co.
“I think the rest of the Nasdaq is taking its cue from the fact that a
lot of bad news has been priced into this marketplace. The January Effect is
really starting to kick in, and if you look at fund cash levels across the
board, this market is really going to have some support to it,” he added.
According to preliminary numbers, the Nasdaq rose 64.20 to 2682.75, the Dow
eased 68.32 to 10,584.34, and the S&P 500 added 2.75 to 1329.40.
Top sectors included semiconductors
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up 4.1%, and computer technology
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Weaker sectors were biotechs
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down 3.9%, and pharmaceuticals
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Chips powering the SOX surge included Linear Technology
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Novellus
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Semi
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up 6%.
Among tech screamers were Avanex
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up 14%, Verisign
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As for the Nasdaq’s outlook, Greg Nie, Senior Vice President of Technical
Research, First Union Securities said “I believe the oversold condition
that developed early in January is the prime catalyst here. We’re blithely
navigating earnings season so far. I think we can push into, but probably not
through, the resistance zone that I see at 2800 to 3000 for the Comp on a
short-term basis.”
Looking ahead, the December housing starts number will be released on
Thursday at 8:30 AM ET, and analysts expect to see 1.52 million units.