Nasdaq Reverses Fall to Gain 106 in Tech Rally
Buyers jumped back into many technology stocks Wednesday, driving a strong rally in major tech issues and sending Nasdaq trading volume soaring to a five-week high.
Is it the end of Nasdaq’s dismal spring slide? Many analysts, not surprisingly, are reluctant to go that far in the wake of three major failed rally attempts since April 4.
But the action certainly heartened Wall Street. “We’ve had some major declines, and I believe we’re close to a bottom,” said Michael Manns, who helps manage $8 billion for American Express Asset Management Group.
The Nasdaq composite reversed a 121-point morning decline to close up 106.06 points, or 3.4%, at 3,270.61.
That recouped a little more than half of Tuesday’s 199-point dive, which had left the index at a six-month low. And falling stocks still outnumbered winners by 25 to 16 on Nasdaq on Wednesday.
But the surge in trading volume--to nearly 2.1 billion shares, highest since April 18--suggested that more investors were gaining conviction that the tech sector won’t go much lower.
What’s more, there was enough buying power in the market Wednesday to push many “old-economy” sectors higher, including consumer products, food and bank stocks. Some of them may have benefited from optimism over the U.S. House’s expected approval of normal trade status for China, which came after markets closed.
Volume rose sharply on the New York Stock Exchange, where the average stock gained 0.8%.
The Dow industrials added 113.08 points, or 1.1%, to 10,535.35.
From an emotional standpoint, many investors were simply tired of selling, said Scott Bleier, chief investment strategist at Prime Charter Ltd. in New York. Nasdaq had fallen five straight sessions, through Tuesday.
“Investors’ fear has led to miserable market action,” Bleier said. “That fear finally reached a pessimistic crescendo that allowed the Nasdaq to put in a bottom and move higher.”
But traders will be watching for more evidence that the market has turned. What’s key, many say, is that prices rise in coming days on increasing--not decreasing--volume.
Among Wednesday’s highlights:
* Beaten-down tech and telecom issues leading the turnaround included Intel, up $7.50 to $117.38 after it said it will spend $2 billion to expand a major chip plant; Applied Materials, up $6.56 to $78.44; Cisco Systems, up $4.58 to $55.13; Global Crossing, up $2.69 to $26.31; and ISS Group, up $17.63 to $85.63.
Also, Southland-based computer services firm Computer Sciences jumped $6.44 to $95, a record, after winning a big contract in Australia.
* Intuit soared $8 to $35.06 on the heels of the software firm’s earnings report.
* Food stocks continued to surge on expectations of more consolidation in the industry. Quaker Oats rose $1 to $73, Heinz rose $1.63 to $40.44, Wrigley surged $3.25 to $78.19, and Anheuser-Busch rose $2.06 to $79.81.
Many consumer-products names also gained, including Clorox, up $1.19 to $39.81, and Avon Products, up $1.06 to $39.56.
* Bank stocks also were strong. Bank of America jumped $3.38 to $55.94, Bank One rose $1.13 to $32.56, and Wachovia gained $1.38 to $68.69.
* As Wall Street rallied, so did battered Latin American markets. The Mexican share index jumped 3.7%, and the Argentine market gained 4.5%.
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Market Roundup, C11-12
