Nasdaq sets another record
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December 27, 1999: 5:53 p.m. ET
Index reverses losses in late-trade; Dow, S&P 500 slip
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - The Nasdaq composite regained its footing to post another record Monday while blue ship stocks retreated to end the day in the negative territory.
After spending most of the day in the red, technology stocks rebounded late in the session, thanks to bargain-hunting among investors and a strong performance from Internet portal Yahoo!
The Nasdaq added 5.94 points to 3,975.38, its 59th record close for the year. The index was down as much as 67 points earlier in the day.
"The strength in technology is concentrated in a few stocks,” said Rao Chalasani, chief investment strategist at First Union Securities.
"It is obviously a good thing in the short run, but tough for the Nasdaq to stay above 4,000 for long,”
The blue chips and broad-based S&P 500 posted slight losses. The Dow Jones industrial average, in record territory for most of the day, fell 14.68 to 11,391.08, and the S&P 500 index dipped 1.25 to 1,457.09.
Breadth was negative on the New York Stock Exchange, with declines outnumbering advances 1,788 to 1,324. Trading volume reached a moderate 722 million shares.
Market participants noted post-Christmas holiday activity was lackluster. "A lot of institution players are out. Volume is on the lower side," said Paul Rich, trader at BT Brokerage.
Treasury prices rose, with the bellwether 30-year bond gaining 6/32 of a point in price, lowering its yield to 6.47 percent from 6.48 percent late Thursday.
In currency markets, the dollar fell against both the yen and the euro.
Nasdaq regains momentum
Going into Monday’s opening, the Nasdaq composite index was up a phenomenal 81 percent this year, representing the largest increase for any major index since 1915, when the Dow industrials rose 81.7 percent. After Monday’s close, the Nasdaq is now up 81.2 percent, putting the index within striking distance of the Dow’s record-breaking year.
Analysts said they were not surprised to see some money being taken off the Nasdaq table after the index breeched the 4,000 level for the first time last Thursday and again early Monday. Hugh Johnson, chief investment officer at First Albany, said many tech issues have risen to levels that are arguably overvalued.
"It is only common sense the Nasdaq will come under pressure,” Johnson said.
Bill Allyn, director of listed trading at Jefferies & Co., agreed. "It’s not surprising to see a little selling going on. Investors are trying to realize some of the tremendous gains they’ve had in ‘99, especially the Nasdaq,” he said.
Many analysts predict a pullback in technology in the foreseeable future. "On a short-term basis, the index has done so well, it must go through some consolidation,” First Union‘s Chalasani said.
Nevertheless, Chalasani was bullish in his long-term forecast. "The outlook for technology continues to be good,” he added.
E-commerce activity post-holiday
With the Christmas holiday rush over, many online retailers posted sharp losses on a day when Robertson Stephens issued negative comments about e-commerce. The investment firm said results from its Online Shopping Challenge revealed ratings have declined for the second consecutive week as many online retailers had difficulty meeting demands.
Nancy Kramer, President of Resource Marketing, a technology and marketing company, said many online retailers were not prepared for the rush this Christmas season. (388K WAV) (388K AIFF)
Amazon.com (AMZN) retreated 8-7/8, or nearly 10 percent, to 81-1/8 and eBay (EBAY) skidded 8-5/16 to 134.
Online retailer eToys (ETYS) tumbled 5, or more than 16 percent, to 25-15/16, weakened by a downgrade on the stock from Robertson Stephens to "long-term attractive” from "buy.”
Among e-commerce issues, Priceline.com (PCLN) gave back earlier gains, falling 5/8 to 54-3/8. The Internet auction site said Monday it will launch a new site called Perfect YardSale for second-hand goods to compete with online auctioneers such as eBay.
But Yahoo! (YHOO) shook off the day’s losses, advancing 12-3/8 to 415. The Internet portal announced record order volume Monday, up more than 385 percent for the period between Thanksgiving and Christmas compared with the year-earlier period.
On the New York Stock Exchange, America Online (AOL) suffered, easing 2-1/2 to 79.
Aside from online retailers, Wal-Mart Stores (WMT), a member of the Dow industrials, provided some support. The stock climbed 2-1/16 to 69-7/16 after the world’s No. 1 retailer said sales for the week ended Dec. 24 were on track to meet monthly expectations.
Analysts expect to see "window dressing” this week as portfolio managers seek to buy star performers before year-end in order to impress investors.
"Those equities that have done well will continue to do well this week,” said Michael Feeney, editor in chief of Wall Street Strategies.
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