Stocks Warm To Ice-Cold Economy
Stocks managed to shake-off their mid-day doldrums and move higher by the
close following the morning release of the weakest National Association of
Purchasing Managers report since March 1991.
Blue chips turned in the best performance Thursday as telecom, financials,
cyclicals, and consumer stocks paced the Dow and S&P 500 to gains of 0.9%
and 0.5%, respectively. The Nasdaq gained 0.4%.
The NAPM came in at 41.2% which was significantly below the 43.6% analysts
had expected, and that depressed level usually indicates a recession scenario.
For all the worry over inflation and an over-heating economy last year, the
speed at which we have slowed has surprised most economists who have commented
that rates will likely continue to fall for some time.
Volume remained light, with just 1.76 billion shares trading on the Nasdaq
and 1.08 billion shares changing hands on the NYSE.
“It was more of a taking stock kind of day today where we are really now
in the rate-drop cycle. I think people are a little surprised that the recent
numbers are really as bad as all the warnings, yet the indisputable lore of an
aggressively easing Fed has the market strengthening,” said Scott Bleier,
Chief Investment Strategist, Prime Charter Limited.
“Market internals have been good even before the market turned on Jan. 3,
and when things look their worst, believe it or not, it’s really time to buy.
And when things look their best, we’ve learned it’s really time to sell
them,” he added.
According to preliminary numbers, the Dow gained 96.27 to 10,983.63, the
Nasdaq rose 9.93 to 2782.66, and the S&P 500 added 7.44 to 1373.45.
Top sectors were telecom
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up 1.7%, and broker/dealers
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Weakest sectors were Internets
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down 2.3%, and biotecnology
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Among the tech winners was optical networking product maker Digital Lightwave
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earnings estimates on Wednesday and was the recipient of favorable comments from
First Union.
Broker/dealers perking up included Morgan Stanley
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Lynch
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Powering the Dow were SBC Communications
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up 4.1%, Alcoa
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big loser was Boeing
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Looking ahead, the January employment report will be released on Friday at
8:30 AM ET. Analysts expect the unemployment rate to increase to 4.1%, the
average hourly wage to increase 0.3%, and 78,000 new jobs to have been created.