Why New Bull Remains Intact
Tech
stocks took a breather Wednesday and snapped the Nasdaq’s six-day win streak
with a 3.0% decline. Blue chips were under pressure as well, with the Dow
slipping 1.4% and the S&P 500 easing 1.5%.
A
pullback in the Nasdaq was certainly expected given the Index’s six-day 11% run,
and despite the weakness seen into the close, many analysts still view the
recent market action as constructive for stocks.
The
pullback came amid lighter volume as 1.86 billion shares traded on the Nasdaq
and 1.13 billion shares traded on the NYSE.
“The
sentiment in the market still looks positive, as investors have finally begun to
capture the ‘look forward philosophy’ toward the economy.
At the same time, there is the necessary amount of reluctance, anxiety
and fear accompanying the rally, with the bears continuing to voice concern over
valuation,” said Barry Hymen, Chief Investment Strategist, Ehrenkrantz King
Nussbaum.
Our
belief continues to see the opportunity ahead, and to accept the bear market
that existed and ended 2 months ago.
The pullbacks in the market have been rotational among sectors with
little general weakness to be concerned about. That is also evidence of a strong
market,” he added.
According
to preliminary numbers, the Nasdaq slid 68.54 to 2245.31, the Dow lost 151.73 to
11,105.51, and the S&P 500 sank 19.61 to 1289.77.
Sectors
under the most pressure were oil services
(
$OSX.X |
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PowerRating), down 3.9%,
semiconductors
(
$SOX.X |
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PowerRating), down 4.7%, and biotechnology
(
$BTK.X |
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down 5.7%.
Recent
powerhouse Cisco Systems
(
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PowerRating) pulled back 1.05 to 22.43 on
lighter-than-average volume as it consolidated some of its recent gains.
Dell Computer
(
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PowerRating) avoided the tech decline and traded up 1.04 to 26.98 where it
finished back above its 200-day moving average on heavier-than-average volume. Positive comments from Goldman Sachs and Merrill Lynch
helped boost the computer giant.
Another
standout was job search website Monster.com’s parent company TMP Worldwide
(
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PowerRating),
which rose 2.15 to 60.00 on more than double average volume.
Intuit
(
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PowerRating) booked a solid 2.22 gain to 33.35 on nearly double average volume
after announcing better-than-expected earnings on Tuesday.
Top
Dow stocks were Coca-Cola
(
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PowerRating), up 1.9%, Philip Morris
(
MO |
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PowerRating), up 0.8%, and
Procter & Gamble
(
PG |
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PowerRating), up 0.3%.
Dow
losers were Hewlett Packard
(
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PowerRating), Disney
(
DIS |
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PowerRating), and Du Pont
(
DD |
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PowerRating),
which were each down by 4.0%.
Looking
ahead, economic news due out includes April’s new home sales on Thursday at
10:00 AM ET and April’s existing home sales on Friday at 10:00 AM ET. Analysts
expect figures of 980,000 and 5.28 million, respectively.