Tell Us Something We Didn’t Know
Anyone who has followed economic activity over the
past few months, let alone last year, knows it. The economy has ground to a
halt. But the most creditable government institution on matters of growth
and contraction released its official proclamation on the state of the
economy, confirming what the market had been pricing in for more than 18
months: recession.
While the most common definition of a recession is
two quarters of negative growth, the National Bureau of Economic Research’s
is broader, defining a recession as “a significant decline in
activity spread across the economy, lasting more than a few months, visible
in industrial productions, employment, real income and wholesale-retail
trade. A recession begins just after the economy reaches a peak of output
and employment, and ends as the economy reaches its trough.”
The Bureau said we peaked in March this year,
ending a decade of economic expansion, the US’s longest. With no other
releases on the economic calendar, bonds rallied and blue-chip stocks pulled
back early in the session. But positive news from semiconductor stocks is
working to propel tech and to maintain a Nasdaq winning streak that has not
pulled back for more than three days since the Sept. 21 low.
T-bonds and benchmark 10-year notes are giving back
earlier gains and stocks are rallying. The reading from the National Bureau
is a backward-looking measurement. The markets’ behavior is discounting
economic recovery.
The Nasdaq is up 28.14 at 1931.34, the Dow is up 9 at
9969, and the S&P 500 is up 4.00 at 1154.34.
Intel
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of its Pullback From Highs setup and is pushing to levels not seen since the
beginning of August, up .81 at 31.95. The chip giant said it has designed
transistors that can process data faster using less power.
Taiwan Semiconductor
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raising its pre-tax profit estimates by one-half and hiking 2001 sales
estimates by nearly 3%. The world’s largest contract manufacturer of chips
also nudged a three-month high and is up 5% at 16.55.
Traders are also watching retail sales for signs of
consumers’ willingness to spend (an important aspect of economic recovery)
during retailers heaviest season, Christmas. Online retailer Amazon.com
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a stock highlighted in this space in recent weeks, is up 18% to 10.79, a
three-month high, on volume that is on track to be its heaviest accumulating
trade of the year. Amazon said it was selling over 10,000 more items per
hour on its electronic store than last year at this time.Â
Two Internet indices of which Amazon is a component,
the
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PowerRating) and the
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lows, gaining as much as 73% and 62%, respectively.Â