The Market’s Economic Crystal Ball
Stocks opened off Wednesday morning
then promptly rallied with strong industry participation across the board.
Before the open, the government reported weaker-than-expected inflation.
The market ignored an earnings
disappointment from Applied Materials and rewarded a broad segment of sectors.
All these are signs that the market is discounting a strong economy in the future.
The Dow Jones Industrials gained 3.2%,
the Nasdaq Composite 3.9%. In a further show of breadth, the vast majority of
the top-volume Nasdaq stocks also ended the day in the plus column, and 29 of
the Dow 30 ended in the black.Â
Among the leading sectors, the Amex
Biotechnology Index
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gained 8.1%, IEC Pharmaceuticals
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Amgen
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The day’s price action shows how price
can look beyond current fundamentals. The Philadelphia Semiconductor Index
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rose 6.5%. Applied Materials
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4.2% despite missing estimates by a penny. Interestingly, the Gold and Silver
Index
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The only major sector index to part
ways significantly was the Amex Airline Index
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Other top-performing sectors range the gamut from the Amex Internet Index
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5.2%, the Philadelphia Forest & Paper Products Index
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and the S&P Chemical Index
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resistance.
Krispy Kreme Doughnuts
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14.2%. Before the open, the company reported quarterly earnings of 20 cents per share
compared to 14 cents a year ago. FuelCell Energy
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U.S. homebuilder stocks fell after
Salomon Smith Barney downgrades. Decliners included Schuler Homes
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Beazer Homes USA
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