NEW YORK (CNNfn) - As this remarkable year neared its end, investors were counting their winnings Thursday as they locked in profits during the final full day of trading in 1999.|
It was a day of much ado -- volume was light but prices were volatile. Yet nothing much had changed by the close. The Nasdaq composite index and Dow industrials ended in negative territory following Wednesday’s meteoric rise as the technology sector staged a mixed performance.
However, the broader market held onto gains; The S&P 500 posted another record -- but just barely -- ending the session only a point ahead.
The Nasdaq composite, up as much as 49, retreated 4.59 points to 4,036.87. The index closed above the 4,000 mark Wednesday for the first time in its 28-year history.
The Dow Jones industrial average fell 31.80 to 11,452.86, while the S&P 500 index advanced 1.01 to 1,464.47, extending Wednesday’s record performance.
Breadth was positive on the New York Stock Exchange with gainers beating losers 1,753 to 1,377. Trading volume was a lighter-than-usual 560 million shares, with many institutional traders already having closed their accounts for the year.
Thursday’s trading was the last full session of the year. U.S. financial markets close at 1 p.m. ET Friday in observance of the New Year’s holiday.
Treasury prices rose, with the benchmark 30-year bond gaining 7/32 of a point in price, dropping its yield to 6.42 percent from 6.44 percent late Wednesday.
In currency markets, the dollar rose against the yen and fell against the euro.
Qualcomm skews advance
The best example of Thursday's move to lock in profits, as well as an indicator of the market's volatility, was wireless technology provider Qualcomm (QCOM). Following huge gains Wednesday, Qualcomm put negative pressure on the Nasdaq during a teeter-totter type of day Thursday that saw company’s shares slipped 12 to 647.
Qualcomm’s share price fluctuated feverishly, rising by as much as $81 and falling by as much as $20 in the first half-hour of trading alone.
Qualcomm’s stock surged 31 percent Wednesday to close at 659 after PaineWebber initiated coverage of the stock with a "buy" rating and set a 12-month price target of $1,000. As of Wednesday’s close, the stock was up 25-fold this year, the best performance in the U.S. market.
Qualcomm shares will split four-for-one effective after the New York market close Thursday, meaning the Thursday's closing stock price translates to 161-3/4 on a post-split basis.
Also pressuring the Nasdaq were declines among Internet-based retailers and auction sites. Priceline.com (PCLN) fell 3-13/16 to 46-3/4, eBay (EBAY) slid 8-5/8 to 134-15/16, eToys (ETYS) eased 1-3/16 to 25-9/16 and Amazon.com (AMZN) dropped 4-7/16 to 79-1/16.
Terence Gabriel, strategist at IDEA global.com, said a pullback for the Nasdaq in the near-term is possible. (893K WAV) (893K AIFF)
However, analysts did not express concern about the Thursday’s weakness, noting trading activity was subdued. "There are not enough participants to provide liquidity. It is not indicative of any near-term future moves in the market,” said Brian Conroy, head of listed trading at J.P. Morgan.
Yahoo!, Agilent take the lead
But other technology issues took Qualcomm’s place in pacing the market.
Yahoo! (YHOO) rose 12-3/8 to 416-1/16, after analyst Eric Melloul at Argus Research reiterated his "buy” rating on the stock and raised the 12-month price target to $550 from $385.
Agilent Technologies (A) jumped 6-3/4 to 78-3/4 after Lehman Brothers upped its 12-month price target for the stock to $90 from $67. That indirectly helped Dow component Hewlett-Packard (HWP), which used to be Agilent’s parent before spinning it off as a public company in November. Hewlett-Packard shares added 1-5/8 to 115-1/4.
Other winners included network software maker Novell (NOVL), surging 3-11/16, or nearly 11 percent, to 37-1/16, Internet infrastructure company Oracle (ORCL), advancing 1-3/8 to 111-3/8 and 3Com (COMS) gaining 1-7/8 to 47-15/16.
But computer retailer CompUSA Inc. (CPU) suffered, tumbling 5/8, or nearly 11 percent, to 5-1/8 after it posted a 21 percent decrease in overall sales during its fiscal second quarter.
Looking to 2000
Most market participants are already looking to 2000 to gauge whether the pace of the economy and 1999’s record stock-market gains will convince the Federal Reserve to raise short-term interest rates, slowing the economy by making borrowing more expensive for consumers and businesses.
The Nasdaq is up more than 85 percent for the year, on course for the best annual performance by a major U.S. index. The Dow Jones industrial average has gained around 26 percent this year.
Abby Joseph Cohen, the influential Goldman Sachs analyst, sees the S&P 500 rising about 8 percent next year -- well below 1999's double-digit pace. Her outlook for the tech-heavy Nasdaq is one of cautious optimism.
"My feeling is there are some good opportunities left in the Nasdaq," Cohen told CNNfn. "But investors have to be careful."
Numerous analysts expect the Fed to hike rates next year. Fed officials next meet on Feb. 1 and Feb. 2 to discuss the economy and monetary policy. Y2K concerns prompted them to leave rates unchanged at their last meeting on Dec. 21.
"It’s a given that the Fed will raise rates a quarter (percentage) point, perhaps even a half point, in February,” said Larry Rice, chief strategist at Josephthal & Co. "The only way to slow the economy is to stop the stock market and a quarter point isn’t going to do it.”
"You’re dealing with a market that is woefully in need of a correction,” he added.
Markets outside the U.S. took their cue from Wall Street’s rally Wednesday in posting phenomenal year-end gains. Tokyo’s benchmark Nikkei Stock average achieved its highest close for the year and Europe's three largest equity markets - London, Frankfurt and Paris -- ended the 1990s with record finishes. The markets are closed Friday.
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