Will Microsoft Be The Trigger?
Stock indexes are continuing higher after a pop
opening, triggering out of classic Pullback From Highs setups as they trade
above the high of the low bar in their pullback.
The indices have shown resiliency in uncertain times,
continuously shaking off negative news, war, bad earnings, and
bio-terrorism. In the past 30 trading days, the Nasdaq Composite has rallied
as much as 29% off its lows.
The market is in part heartened by news that
Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) may soon settle a multi-year antitrust case. Although
the details of the settlement remain sketchy and still need to be ratified
by more than a dozen states, a quick end to the dispute would free the
market from one of many uncertainties. Spanning two indices, Microsoft’s
market influence is immense. The software giant is the most heavily weighted
stock on the Nasdaq and has been the best-performing stock on the Dow in
2001. MSFT is up 3.30 at 61.46.
The Nasdaq is up 41.09 at 1731.56, the S&P 500 is
up 20.33 at 1080.11, and the Dow is up 177 at 9253.
The new trial judge on the Microsoft case, U.S.
District Judge Colleen Kollar-Kotelly, has worked for an expedited
settlement, citing “`the recent tragic events affecting our
nation.” It is believed that Microsoft will not have to
reveal its source code, but at the same time, the settlement would
prohibit contracts that hindered computer makers from obtaining and
providing rival software for installation in PCs.
Semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) are the best-performing sector, up 5.28%, after a semis industry group said demand for
chips should pick up the remainder of the year. All 16 stocks on the chip
index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) are higher on the session. KLA Tencor
(
KLAC |
Quote |
Chart |
News |
PowerRating),
Linear Tech
(
LLTC |
Quote |
Chart |
News |
PowerRating) and Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating) are the leaders,
up 5.7% to 6.7% each.
Impressively, stocks are managing to shake off yet
more dismal economic news. The National Association of Purchasing Managers manufacturing
index fell for the 15th straight month, hitting a 10-year low of 39.8%. The
reading suggests a recovery in the manufacturing sector is at least six
months away.
And consumer spending fell to a 15-year low, as
individuals stayed home. Rising numbers of unemployed also prompted
consumers to cut spending. Weekly initial claims were 499,000. Continuing
claims rose 55,000 to 3.692 million.
Tomorrow’s jobs report (employment situation) will be
closely watched. Yesterday’s gross domestic product figure of -.4% shows we
are headed into recession. Two consecutive quarters of negative GDP growth
is the traditional determinant of a recession. Most of the deleterious
effects from the 9/11 attacks will be felt in Q4, a certain second
consecutive quarter of negative growth.
Consumer spending is seen as the key to how long a
recession will last. Consumer confidence is the key to spending. And
employment (tomorrow’s number) will give one of the best views of workers’
confidence.