Tech Red Pre-Fed
Blue chips rallied and tech tumbled Monday as traders await Tuesday’s
much-anticipated Federal Reserve meeting where there is now talk of the
possibility of an actual rate cut. Greenspan met with President-elect Bush, but
no clues as to the Fed’s decision emerged from comments from the two.
Financials were strong in anticipation of the Fed meeting, with banks turning
in a particularly solid performance, and that helped pace the blue chips. The
Dow gained 2.0% and the S&P 500 gained 0.8%. Tech stocks were again weak,
and that sent the Nasdaq down 1.0%.
Volume pulled back from Friday’s heavy triple-witch levels, but was still a
solid 2.05 billion shares on the Nasdaq and 1.15 billion on the NYSE.
“Everybody knows Nasdaq has support at 2500 and it’s not just from late
November/early December ’00. Check out this level going back to the period from
January ’99 through August ’99 because there’s a whole lot of trading that
occurred around this area,” said John Roque, Vice President, Arnhold and S.
Bleichroeder.
“So just eyeballing the chart, it’s not hard to find to figure that a
bounce should occur. But even if Nasdaq bottoms today, history suggests that
it’s not going to be bullish again for a long, long time,” he added.
Top sectors were oil services
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up 4.4%, and chemicals
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On the weak side were telecom
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Tech bellwether Cisco touched levels not seen since November 1999 and ended
the day down 5 7/32 to 42 15/16. Apparently, concerns that some of Cisco’s
customers will fail to pay their bills or even possibly go under helped slam
Cisco. The Cisco swoon shows how problems in one area of tech can create a
devastating ripple effect throughout the sector.
Among the banking winners was Wells Fargo
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high-level consolidation to close up 2 1/4 to 52 11/16. Wells Fargo traded
nearly double-average volume as it moved to a new all-time high.
Dow winners were Boeing
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Morgan
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Motors
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Looking ahead, all eyes will be on Alan Greenspan and the Fed Tuesday when
the rate and bias decision is released at 2:15 PM ET. Most analysts expect a
shift to a neutral bias and no rate cut.
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