Jobs growth is strong and inflation remains tame, and the Dow and S&P responded to those “goldilocks” conditions on Friday by hitting 3 1/2-year highs.
The Nasdaq, meanwhile, remains mired in a downtrend more than 5% below its January peak, and IBM and HP
were the only Dow stocks besides GM
to close lower on Friday. Microsoft
finished unchanged, while Intel
was the only tech stock of the Dow 30 to post a gain on the day.
Those ideal economic conditions should also benefit IT spending, so why aren’t tech stocks joining the party?
It could just be sector rotation — techs led early in the recovery, and investors may now be rotating into later-stage blue chips. And technology companies in almost every sector have been slowed over the last year by bulging inventories and pricing pressures, so investors may be wary of the sector and chasing more promising opportunities elsewhere.
But it’s also cause for some concern that a big engine of the market and the economy has stalled while everything appears to be going smoothly on the surface. Perhaps rising oil prices and interest rates are more of a drag than they appear to be.
Tech stocks may join the party soon enough, but until then, the market is signaling that there is at least some reason for caution here.
The Nasdaq rose 12 to 2070 on Friday, the S&P 500 gained 11 to 1222, and the Dow surged 107 to 10,940. Volume rose to 1.64 billion shares on the NYSE, but declined to 1.84 billion on the Nasdaq. Advancers led 25-7 on the NYSE, and 17-13 on the Nasdaq. Downside volume was 75% on the NYSE, and 62% on the Nasdaq. New highs-new lows were 427-16 on the NYSE, and 139-47 on the Nasdaq.
Dell climbed 2% after boosting its share buyback plan by $10 billion.
Sonus plunged 18% after the company delayed its earnings report to address weaknesses in its financial controls.
Siliconix soared 25% on a takeover offer from Vishay
.