Tech Stocks Feel Post-Christmas Letdown
The Nasdaq market’s pre-Christmas optimism faded Tuesday as investors returned to their pattern of unloading tech stocks and shifting money into blue chips.
Treasury bond yields ended mostly higher as some bond traders took profits in the wake of the sharp decline in yields in recent weeks.
On Wall Street, the Nasdaq composite index lost 23.50 points, or 0.9%, to 2,493.52, disappointing investors who had hoped that Friday’s Nasdaq surge was the start of a strong year-end rally.
The index rocketed 176.90 points, or 7.6%, on Friday, the fifth-biggest percentage gain ever.
Blue chips on Tuesday built on Friday’s gains. The Dow industrials rose 56.88 points, or 0.5%, to 10,692.44, after leaping 148 points on Friday. Energy stocks led the way as oil and natural gas prices resurged.
The Standard & Poor’s 500 index rose 0.7% Tuesday and the S&P; small-cap index gained 0.8%.
In the broad market, winners topped losers by 3 to 2 on the New York Stock Exchange on light post-holiday volume. But on Nasdaq losers had a 23-17 edge.
“We’re still very unsure of technology stocks going into the end of the year,” said Brian Belski, a market strategist with US Bancorp Piper Jaffray. “But you can’t really count [Tuesday’s] activity as a definable trend because trading volume was really light and a lot of the players weren’t there.”
Trading was the slowest for a full day on the NYSE in almost three months, with many traders and investors out of the office on the day after Christmas and European markets closed.
That didn’t help many tech leaders. The losers included Oracle, down 94 cents to $30.94, and Sun Microsystems, down $1.56 to $30.31. While Yahoo rose $1.63 to $31.19 and Microsoft added 44 cents to $46.88, IBM slid $4.19 to $84.81, QLogic fell $5.19 to $75.63 and EMC fell $2.94 to $65.31.
Still, the ferocity of the selling in tech early last week was absent Tuesday. The Nasdaq index closed well up from its worst levels of the day. It had been down as much as 81 points.
Some traders still are holding out hope that the tech sector can muster a year-end rally and close this week with net gains. Others, however, say concern about the slowing economy, and continued year-end tax-related selling, could weigh on Nasdaq all week.
“You have little impetus for any gains today or this week,” said Barry Hyman, investment strategist with Weatherly Securities.
Tech investors, he said, want to see the Federal Reserve cut interest rates to stop the economy’s slide, and there is no indication the Fed will act before its next meeting, in late January.
“In the absence of that type of news, the market’s going to err on the down side,” Hyman said.
But that isn’t stopping investors from looking for bargains in other sectors--or from chasing sectors that have been hot this year.
Energy stocks zoomed Tuesday as cold weather in much of the country helped push futures prices for crude oil and natural gas higher in New York. Oil rose 46 cents to $26.64 a barrel; natural gas rose 22.6 cents to $9.81 per million British thermal units.
Big winners in the energy sector included Chevron, up $2.19 to $82.81; Amerada Hess, up $4.31 to $73.38; and Anadarko Petroleum, up $7.31 to $71.95.
Major drug stocks also continued to gain. Merck rose $2.19 to $92.69, Eli Lilly jumped $2.25 to $89.94 and Bristol-Myers Squibb was up $1.63 to $70.
Many financial issues rallied again, led by Wells Fargo, up $1 to $54.94, and Goldman Sachs, up $3 to $101.81.
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Market Roundup: C9, C10
