Stocks Trend Higher

Stocks traded on both sides of the line in early trading and come to midday on the upside. News that the National Association of Purchasing Management’s (NAPM) factory index fell again in December renewed expectations that more Federal reserve interest rate cuts are likely, and perhaps sooner rather than later.

The NAPM factory index fell to 41.2 last month from 44.3 in December, with new orders and production levels falling to their lowest levels in nearly 19 years. Any reading below 50 indicates a contracting economy, so these new numbers reflect an increasingly weaker economy. On the weak economic news, U.S. Treasury bonds advanced strongly again today for the third straight day.

All major indexes held onto gains at midday. The Dow Jones Industrial Average was ahead 39 points, the Nasdaq Composite Index was up 15 points, S&P 500 Index remained in positive territory by almost four points. Among the tech sectors supporting modest market gains were semiconductor, software, networking and telecom.

By midday, the ISDEX notched nearly a point to 423, as losers and gainers were evenly split. Among the early-day leaders, four funds sported gains exceeding five percent:

Advancing and declining issues were narrowly split, with advancing issues leading decliners on the new York Stock Exchange, and decliners leading advancers on the Nasdaq. Trading volume was also narrowly split with up volume exceeding down volume on both exchanges.

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Among the early day winners and losers were:

  • InterTrust Technologies Corp. (ITRU), a digital security firm, gained more than 50 percent. Recently, Nokia Corporation (NOK), the global leader in mobile communications and InterTrust signed an agreement by which Nokia will license the InterTrust Commerce and Rights/System DRM solutions, and has selected InterTrust as its preferred DRM technology. In addition, Nokia will invest and acquire nearly 5% ownership of InterTrust stock for $20 million.

  • Aeroflex, Inc. (ARXX), a leading designer, developer and manufacturer of microelectronics and automated testing solutions for the broadband communications market, yesterday announced record operating results for its second quarter ended December 31, 2000. The stock jumped 21 percent by midday.

  • On the downside, Cacheflow Inc. (CFLO), today announced that revenue and operating results for its third quarter ended January 31, 2001, will be below the company’s previous expectations. The stock dropped more than 10 percent on the news.

Note: Technical market commentary will return tomorrow, Friday, February 2, 2001.

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