Stocks soared Thursday on signs of a slowing economy, but Internet stocks barely rose after leading the market higher on Wednesday.
The ISDEX gained 2 to 827, and the Nasdaq soared 70 to 4173. The S&P 500 climbed 17 to 1519, and the Dow surged 180 to 11,283. Volume rose to 445 million shares on the NYSE and 815 million on the Nasdaq. Advancers led 15 to 10 on the NYSE and 22 to 14 on the Nasdaq. Traders cheered much weaker than expected Chicago Purchasing Managers and factory orders reports. Tomorrow is the August jobs report. Analysts expect a loss of 20,000 jobs and a 4.0% unemployment rate. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our new after hours trading site.
PurchasePro gained 2 3/16 to 61 3/8 on a Lehman Brothers Outperform rating and comments that the company was undervalued relative to its peers. B2B stocks were mixed after a strong rally yesterday. Commerce One
rose 1 7/16 to 64 11/16, and i2
added 3 1/16 to 171 13/16. But Ariba
slipped 1 11/16 to 150 13/16.
Broadcom slipped 1 7/16 to 237, off its low of 228 3/4, after Intel
announced it was filing a patent infringement suit against the company.
InfoSpace added 15/16 to 37 9/16 on news that it is one of the top picks of the Munder NetNet Fund.
Akamai rose 3/8 to 72 7/8 on a Wit SoundView Buy rating and $85 price target.
Infrastructure plays were strong on positive comments from CIBC World Markets. Extreme Networks gained 5 5/8 to 89 7/8, Foundry Networks
added 4 1/8 to 90 3/16, and Redback Networks
rose 13 1/8 to 150 1/8.
viaLink climbed 1 1/16 to 9 3/8 after PepsiCo said it would use the company’s e-commerce services.
Stamps.com rose 31/32 to 6 21/32 on an expanded alliance with Office Depot.
GetThere.com slipped 1/16 to 17 5/16 despite beating earning estimates by 10 cents with a 19-cent loss.
Japan’s NTT Communications announced that it had acquired 95.6% of Verio , off 1/8 to 59 13/16, for $60 a share. The deal is expected to close at the end of September.
Yahoo continued to show weakness on revenue concerns, down 1 1/4 to 122.
Some technical comments on the market: A strong rally today on high volume and good breadth, and a lot of negated rising wedge breakdowns to boot. The ability of the market to fend off such bearish patterns is a definite positive. Now we need to see some follow-through. The Dow, S&P 500 and the S&P 100 negated their rising wedge breakdowns this morning. That said, they haven’t gone very far since then, and the S&P 500 and 100 could wind up back below those lines if the market doesn’t close on a strong note. The Dow is just below its April secondary high of 11,287; a close above that number could give the index room to 11,400. The S&P 500 continues to get nervous around its all-time closing high of 1527, turning back at 1521 today. The Nasdaq broke out of its rising wedge to the upside this morning and broke its downtrend line, and the Nasdaq 100 crossed the critical 4000 area. Again, all positives for the market to build on. The Nasdaq 100 and the ISDEX are still about 30 points each from their upper rising wedge boundaries; the Nasdaq 100 particularly bears watching, since it seems to be providing the main resistance here, as we noted yesterday. To the downside, we want to stay above 800 on the ISDEX, 3960 on the Nasdaq 100, and 4070 on the Nasdaq, the respective lower wedge boundaries.
Re
cession indicator update: The treasury yield curve has now been inverted for more than a month, and it seems to be a given at this point that short-term yields will remain above 10-year yields for two months, a phenomenon that has predicted a recession 86% of the time in the last 40 years. More importantly, the two-year/10-year inversion is at its steepest since 1980. It may sound hard to believe in an era of 5% GDP growth, but the U.S. economy may be headed for a significant slowdown.
