Buyers Buoy Nasdaq; Sell-Off Slows Dow
Investors came back from the weekend in a selling mood Monday--but it didn’t last long.
The Nasdaq composite index slumped 1.3% at the outset of trading, after diving 10.5% last week. But buyers soon jumped in, and Nasdaq rebounded to close up 103.99 points, or 2.8%, to 3,766.99.
The Dow industrials, by contrast, rallied early, then sold off late--suggesting that Nasdaq, and tech stocks, partly gained at the Dow’s expense.
The Dow added just 10.81 points for the day, to 10,521.98, after trading as high as 10,603.
In the broad market winners topped losers by 22 to 17 on Nasdaq as 1.5 billion shares changed hands--a moderately active session. Winners topped losers by 17 to 12 on the New York Stock Exchange.
Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee, said some bargain hunters couldn’t stand to stay out of the market after last week’s swoon, which was the third-worst weekly percentage decline in Nasdaq’s history.
The slide was sparked by some downbeat earnings forecasts from major tech and telecom companies, including WorldCom and Nokia. Also, economic data suggested the economy may be continuing to grow at a pace that’s faster than the Federal Reserve would like.
Berman said investors remain nervous about inflation and whether Fed policymakers this month will implement their seventh interest rate increase since June 1999.
“Up until last week it was pretty much assumed the Fed would not do anything. But now that is in question,” Berman said.
Friday’s stronger-than-expected report on second-quarter gross domestic product growth intensified inflation fears and led to renewed selling. Nasdaq slid 4.7% on Friday alone.
To get a clearer idea of where the economy and inflation stand, investors will be closely watching reports this week on consumer spending, new home sales, manufacturing and retail sales.
Overseas, Asian markets took another hit Monday, tracking Friday’s Wall Street slide. The Tokyo market fell 0.7% to 15,727 on the Nikkei index. Hong Kong’s market fell 2%.
In U.S. commodity trading on Monday, crude oil fell almost 3%, capping its biggest monthly decline since November 1998, on waning concern about tight supplies of gasoline.
U.S. gasoline inventories are above year-ago levels for the first time since October, according to an industry report last week. Oil prices that rallied to more than $33 a barrel in June fell 16% in July as gasoline inventories rose.
Near-term oil futures fell 75 cents to $27.43 a barrel.
Among Monday’s highlights:
* Tech stocks rebounding included WorldCom, up $2.50 to $39.06; Nokia, up 19 cents to $44; Intel, up $2.19 to $66.75; Apple, up $2.50 to $50.81; and Cisco Systems, up $2.63 to $65.44.
Also gaining were Ciena, up $7.69 to $142.13, and Micron Technology, up $2.56 to $81.50.
* In the Internet sector, Redback Networks jumped $8.50 to $130, Juniper Networks rose $7.94 to $142.44 and Go2Net gained $3.31 to $59.06.
* Visx, the laser vision-system maker, rose $3.19 to $25.19 after reports that financier Carl Icahn plans to acquire an 11% stake in the company.
* Some investors snapped up airline stocks as oil prices fell. Delta jumped $2.50 to $53.69 and UAL gained $2.13 to $54.13.
* Wal-Mart fell $3.38 to $55.31. A German newspaper reported that the world’s largest retailer could swap its Sam’s Club warehouse stores for the Real and Extra stores of Germany’s No. 1 retailer, Metro.
* Procter & Gamble fell $2.19 to $57. The biggest U.S. maker of household products is expected to report fiscal fourth-quarter earnings today.
Market Roundup: C11-12
