Technology Crawls Higher
It was a lethargic day on Wall Street. Major market indices barely budged. A lack of economic reports today and potential apprehension for the reports coming out tomorrow and Friday could have put investors on the defensive. Of course that's assuming there were any investors paying attention with so many financial professionals on vacation. Volume continues to be light on Wall Street and it's only going to get lighter as we approaching the Labor Holiday weekend.
Financials seemed to feel the brunt of the selling but the damage was meager for the BIX and BKX indices. Tech stocks took the opportunity to inch higher fueled by a round of upgrades for the semiconductor sector. The SOX index lead the way with a 2.95% gain closing just under 450. Bear Stearns, Lehman Brothers and Harris Nesbitt Gerard all upgraded specific chip stocks. Following the SOX higher was the DDX disk drive index, GHA hardware index, NWX networking index, GSO software index and even the INX Internet index.
The Dow Jones Industrial Average was nearly split down the middle with 13 winners and 16 losers led lower by SBC Communications, Johnson and Johnson and 3M. The $INDU closed down less than 7 points near 9333. Meanwhile the NASDAQ Composite inched higher to close up about eleven and a half points at 1782. The S&P 500 remains almost unchanged at 996. Not helping the mood of the markets were small losses across the Pacific in the Asian exchanges but these were countered by small gains in their European counterparts.
Market internals reflected a slightly different story with advancing issues outpacing decliners by 16 to 11 on the NYSE and 18 to 11 on the NASDAQ. New highs were growing again with 271 swallowing the 16 new lows between the two exchanges. Up volume bested down volume as well, indicating that despite recent statements from Wall Street pundits, the path of least resistance may be up. Optimists will note that we continue to see money move into small caps as the Russell 2000 index added another five points on top of its recent rebound.
Chart of the Dow Jones Industrial Average:
Chart of the NASDAQ Composite:
It certainly felt like the market was asleep but technology bulls took advantage of the slumbering bears to drive all of the tech- related indices higher. Other indices making gains were the DFI defense index and the RLX retail index. Last night Sears came out with positive comments saying August sales were doing better than expected. Plus traders saw Dollar Tree (DLTR) add almost four percent after beating earnings estimates and raising guidance. However, probably the most impressive gain was the XAU gold & silver index. The XAU added 4.3 percent to close at 91.34. Aside from some intraday highs in September of 1999, today is the best closing high since April of 1998. If the XAU can close above 93.50 it will be the best close since October of 1997.
With the markets in a lull before the holiday and the end of week economic reports financial media turned their spotlight on Richard Grasso, Chairman of the New York Stock Exchange. Grasso has been with the company for 36 years and just signed a new agreement to extend his contract by two more years to 2007 paying him a base salary of $1.4 million and an annual bonus of at least $1 million. No one argues that he is richly paid but what shocked and alarmed some investors and industry professionals was the $140 million that the NYSE just paid Grasso. The exchange said the $140 million was Grasso's accrued savings, retirement benefits and incentive awards. I imagine there are plenty of people in line to interview for that job when he decides to retire.
Traders need to be careful as we endure Thursday and Friday's sessions. Tomorrow, before the bell, will be the weekly unemployment claims. Wall Street is looking for a slight increase to 390,000 and hopes if there is an upside surprise it remains below the 400,000 mark. We'll also get the Q2 GDP numbers. Actually, it's just the revision of the Q2 GDP numbers, which came in at +2.4%. That was a lot higher than the +1.4% expectation. There appears to be some disagreement on whether the revision will be up or down. Tomorrow will also reveal the latest help wanted index readings. Friday, if anyone is still paying attention and not packing the car for a weekend getaway, will produce the Personal Income and Spending numbers before the opening bell. During Friday's session we'll hear the Michigan Sentiment report and the Chicago PMI index result.
There are not a lot of reasons to be buying stocks ahead of the weekend when most investors will be waiting to hear from these various economic reports. Trade carefully.