Cooling Sales Ignite Nasdaq
A weaker-than-expected May retail sales number helped set the stage for a
broad-based rally that took the Nasdaq up 2.2% and S&P 500 up 1.6%. Analysts expected retail sales to come in flat for May, but the 0.3%
decrease provided yet more proof that the Fed’s year-long string of rate hikes
may be coming to a close.
After trading more than 70 points in the red, the Nasdaq bounced off of its 200-day moving average and turned on the juice
in the final two hours of trading to soar straight into the close. The Dow
also moved higher despite an analyst downgrade on Hewlett Packard that took away
a little of the Dow’s steam. Hewlett Packard fell 7 to 119 while the Dow rose by
about 0.5%.
Nasdaq volume increased 7% over Monday’s level with 1.36 billion shares
changing hands while the NYSE volume increased about 21%, with 914 million shares
trading.
Most analysts have been impressed with the Nasdaq’s ability to hold on to its
recent gains, and many believe that an inflation-friendly Consumer Price Index
report could really provide the push the Nasdaq seemingly needs to move higher.
"We’ve established the foundation in post-Memorial Day trading for a
critical mid-year rally. The next rally, assuming that we’re in it now, is one
that needs to re-earn the label ‘bull market.’ So far, we’ve set the table, but
not much else has happened since," said Gregory Nie, Senior Vice President
of Technical Research, First Union Securities.
"We have a moderate oversold condition, so with the combination of that
and the tendency of triple-witch week to be on the upside more often than not,
we’re still willing to give the bulls the benefit of the doubt," he added.
According to preliminary numbers, the Nasdaq jumped 83.22 to 3851.13, the Dow
rose 57.63 to 10,621.84, and the S&P 500 added 23.44 to 1469.44.
Top-performing sectors included semiconductors
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software
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health care
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Sectors under pressure included forest and paper products
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down 1.6%, chemicals
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down 2.9%.
Pacing the red-hot semiconductor sector were big gains by Rambus
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up 14%, Linear Technology
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Altera
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Other tech bellwethers posting solid gains were Intel
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Cisco
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up 1.5%.
Joining Hewlett Packard
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Caterpillar
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Dow leaders in addition to Intel were Home Depot
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up 4.7%, and Wal-Mart
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Looking ahead, the Consumer Price Index is due out on Wednesday at 8:30 AM
ET, and Street estimates look for a 0.2% increase in both the CPI and the core
rate.