Skittish & Choppy
Tame inflation numbers failed to motivate stocks Wednesday, as blue chips
faced selling pressures for the second day in a row. The Dow slipped 0.5%, and
the S&P 500 eased by 0.3% as retailers and financial stocks continued to
slide. The Nasdaq, though, notched a small gain thanks to strength in
semiconductors.
Both the CPI and core CPI rates came in with the expected 0.2% increase, while housing starts increased at an annual rate of 1.51 million, which was
lower than the 1.57 million that analysts had expected.
Volume remained light and increased slightly above Tuesday’s levels, with
1.38 billion shares trading on the Nasdaq and 931 million shares trading on the
NYSE.
Although the market continues to show skittishness ahead of next Tuesday’s
Fed Meeting, traders and analysts are beginning to sound much more optimistic
about the prospects of a successful soft landing in the economy as well as an
improving stock market in the months ahead.
"I think, frankly, that the cloud has lifted with regards
to the Fed, and I think the bias is getting on the long side of this market now. I
think it’s still going to be choppy, though, given that it’s the last two weeks of August
and everyone being away," said Scott Cummings, General Partner, Agile
Asset Management.
"So, therefore, the volume will be light, adding to the
volatility, but I feel pretty good about the tech sector. I think we could be in
for a surprise on the upside, particularly on the semi and semi equipment areas
which have been under such pressure lately. These things are really bouncing off
the bottom, and I think the fundamentals are great," he added.
According to preliminary numbers, the Dow lost 58.61 to 11,008.39, the Nasdaq
rose 9.55 to 3861.21, and the S&P 500 slid 4.58 to 1479.85.
Top-performing sectors included oil services
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and silver
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and semiconductors
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Under pressure were banks
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down 2.4%, and retailers
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Semiconductors pacing the SOX were LSI Logic
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Materials
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up 3.0%.
In the Internet space, Lycos
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posting better-than-expected quarterly earnings. Analysts polled by First
Call/Thomson Financial projected earnings of 8 cents per share, but the Waltham, Mass.-based
portal booked earnings of 12 cents per share.
Also strong in the Net group was eBay
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after an analyst upgrade on eBay’s prospects for global growth.
Dow winners were Philip Morris
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Johnson & Johnson
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down 3.1%, Wal-Mart
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Looking ahead, economic news remains light for the rest of the week, but
traders will be eyeballing the Philadelphia Fed Survey which will be released on
Thursday at 10:00 AM ET.