Nasdaq Reclaims 4K
Strength in Internets and semiconductors helped the Nasdaq manage to close
back above 4000 on Tuesday for the first time since April 11. At this level, the Nasdaq is positioned nearly 300 points above its 200-day average.
Weakness in
cyclicals and consumer stocks, however, helped weigh on the Dow and S&P 500 which fell
1.1% and 0.7%, respectively, and failed to join the Nasdaq in the green. Traders commented that anxiety ahead of next week’s
Federal Reserve meeting continues to hang over the market, and that has helped
perpetuate the recent lack of conviction among market players.
Volume on the Nasdaq increased to 1.67 billion shares, which was 20% above
Monday’s level, and NYSE volume ended the day at 1.02 billion shares, which
topped Monday’s volume by 10%. While traders would welcome more volume, most
remained impressed with the Nasdaq’s resiliency and its ability to book a close
above the psychological 4000 level.
"The market’s been plagued by anxiety about whether the Fed
raises rates in June, and we think the Fed is on hold in June. Overall, I would
say there has been a lot of disbelief in the recent rally, but the fact is that
the Nasdaq indices have broken above and closed above their May 1 reaction peaks
that occurred after the March into April crash," said Terence Gabriel, Stock Market Strategist,
IDEAGlobal.com.
"On a technical basis, it looks as if the longer-term trend studies are
turning positive here and suggesting that we have a significant run that should
occur in the Nasdaq during the next two to three months," he added.
According to preliminary numbers, the Nasdaq added 23.53 to 4013.36, the Dow
slipped 122.68 to 10,435.16, and the S&P 500 eased 9.72 to 1476.28.
Leading sectors included Internets
(
$GIN.X |
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(
$SOX.X |
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$JPN.X |
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broker/dealers
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Sectors under pressure were forest and paper products
(
$FPP.X |
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1.9%, chemicals
(
$CEX.X |
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$IUX.X |
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2.6%.
In the resurgent Internet space, several of the stalwart Net blue chips
pacing the Goldman Sachs Internet index included Yahoo!
(
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America Online
(
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up 4.0%.
Broadband chip maker Broadcom
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rising 19 9/32 to 166 25/32 after Standard & Poors announced the company
would join the S&P 500. Broadcom will replace GTE
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unspecified date.
Among Dow components, Honeywell
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1. The stock fell 16% Monday after the defense giant warned that it would fall
short of analyst earnings expectations for the upcoming quarter. Also weak in
the Dow were General Motors
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3.4%.
Dow winners included Microsoft
(
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BA |
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General Electric
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(
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Looking ahead, the week’s economic news is light as traders look ahead to
Thursday’s weekly unemployment numbers at 8:30 AM ET for more clues as to the
Fed’s inclination about rates next week.