Blue Chips Wounded

June 16, 2000
TradingMarkets Editors

More profit warnings from the banking group as well as a profit warning from
Xerox cast a shadow across the blue-chip landscape Friday, sending the Dow and
S&P 500 down 2.4% and 1.0% respectively. Worries that further interest rate
hikes could greatly impact interest-sensitive stocks kept blue chips under
pressure into the close. Hawkish comments from a Fed board member on Thursday
also weighed on stocks.

New housing starts came in at 1.59 million, which was less than the 1.62
million analysts had expected, but the only beneficiaries from the news were a
select group ofÂ tech and biotech stocks. The Nasdaq managed to end the day
up a slight 0.4%.

Despite the triple witching action, volume remained light, with 1.2 billion
shares trading on the NYSE and 1.4 billion trading on the Nasdaq. NYSE volume
was about 20% higher than Thursday, while Nasdaq volume was only slightly
higher.

“This continues to be a confusing time with many cross-currents. The market is
really spinning its wheels and actually locked in a range. We’re just seeing trading
range action and consolidation from the move from two weeks ago which took us
from the bottom of our range to the bottom part of the upper third of our
range,” said Scott Bleier, Chief Investment
Strategist, Prime Charter Limited.

According to preliminary figures, the Dow sank 265.52 to 10,449.30, the
Nasdaq gained 14.80 to 3860.54, and the S&P 500 slid 14.13 to 1464.47.

Among technology winners was Rambus
(
RMBS |
Quote |
Chart |
News |
PowerRating), which soared 25 1/2 to 82
3/16. Rambus split 4-for-1 on Thursday and also benefited from some positive
analyst comments prior to today’s action.

Looking to next week’s prospects for the Nasdaq, John Roque, Vice President, Arnhold and
S. Bleichroeder said, “We’re sticking with 4000 as our next upside target
for Nasdaq. While this number is not much higher than where we are now,
we’re still reluctant to get more aggressive on tech because we believe that
many stocks are going to find it hard to work through resistance.”

“The
best thing occurring in technology land, though, is that the number of new lows has dried
up, and the number of new highs is improving, albeit slowly,” he added.

Next week is fairly light in terms of economic numbers, so traders will
primarily be watching for any new earnings pre-warnings like the ones that
rattled the banking sector this week. The much-anticipated Fed meeting takes
place on Tuesday June 27.

Blue Chips Wounded

BUY THE FEAR, SELL THE GREED

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