Waiting And Wondering
Ongoing difficulties in choosing a President and no change in interest rates
or the Fed’s inflation bias left stocks non-committal Wednesday, as traders
continued to see lackluster action in what has traditionally been the most
bullish time of the year. Stocks moved higher early in the day and then sank
after the Fed announcement and then managed a late-session bounce that left the
Nasdaq up 0.9%, the S&P 500 up 0.5%, and the Dow up 0.2%.
Despite talk of increasing weakness in banks’ loan portfolios, the Fed chose
to stay on the interest rate sidelines. Banks were the weakest sector for the
second-straight day, but apparently, the Fed still believes the tight job market
is keeping the threat of inflation alive.
Volume lightened on both the Nasdaq and NYSE, but was only slightly below
Tuesday’s levels. Nasdaq volume was 1.70 billion shares, and NYSE volume was
1.07 billion shares.
"In reference to time, I think we are very close to a significant rally,
but I think in the very short term there is still a possibility for a move back
to the downside. My target on the Nasdaq has been 2500 to 2700," said Ricky
Harrington, Technical Analyst, Wachovia Securities.
"That’s based on a couple of factors. One, I think that what we are
seeing is almost a replay of what happened in Japan in 1990, but more to the
point, I think it may take a move to 2500 to 2700 to finally create a situation
where sentiment is negative enough to substantiate a decent rally," he
added.
According to preliminary numbers, the Nasdaq gained 27.12 to 3165.39, the Dow
added 26.54 to 10,707.60, and the S&P 500 rose 6.86 to 1389.81.
Top sectors were oil services
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up 4.6%, and semiconductors
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Internets
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sectors, falling 1.7% and 3.0%, respectively.
Network Appliance
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and fell 20 1/8 to 76 1/8. Network Appliance said its future revenue growth may
slow, and that was all it took for traders to dump the stock.
In the newly created "rest-in-peace" Internet sector, Garden.com
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joined Pets.com as yet another online retailer that will cease operations.
Garden.com traded as high as 24 1/8 in October 1999 and ended the day down 1/8
to 1/8.
Dow winners included Wal-Mart
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3.2%, Disney
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With the Fed’s bias continuing to worry about inflation, all eyes look
Thursday toward the Consumer Price Index, which will be released at 8:30 AM ET.
Analysts expect a 0.2% increase in both the CPI and the core rate.