High-Tech Remains U.S. Stocks' Driving Force
Hi there Uncle,Are you ready to rrrrrrrruuuuuuuuuuuummble...?????? I am.
For one thing where the heck are they going to go but technology? I don't know about you but I am in.
==================================
(02/11/99, 5:26 p.m. ET)
By Reuters
NEW YORK -- Buoyant technology stocks are likely to remain the driving force behind U.S. markets despite a recent sell-off, analysts said.
They said a modest switch in the past few weeks out of big technology stocks -- encompassing telephone, Internet, and computer stocks -- signaled that markets were fighting to keep their gains.
Technology issues surged Thursday in an indication that the sector remained a Wall Street favorite despite modest shifts into other groups. The technology-heavy Nasdaq index jumped more than 4 percent Thursday, closing up 95.97 points, the largest one-day point gain in Nasdaq's history. However, the index is still about 5 percent off its Feb. 1 closing high.
"The point is that ... at the end of the day you go back to the leaders," said Thomas Galvin, chief investment officer at Donaldson Lufkin & Jenrette.
The technology group has soared as it led the U.S. markets' most recent bull run since October 1998. The strong rise fueled worries that the stocks were overpriced and had gone too far, too fast.
Analysts said that even as investors looked elsewhere for gains, technology shares remained likely the best-performing U.S. sector for the next few years.
They would stay attractive in part because of strong earnings growth and because they are a driving force in the U.S. economy. Graham Tanaka, manager of the Tanaka Growth Fund, said the dip in technology shares was partly profit-taking and some "rejigging" of portfolios following their strong run higher.
"The fundamentals are a green light for techs for the next couple of years at least," he said.
Investors rebalancing their portfolios after the technology group's surge are targeting such areas as retailers, auto makers, food, and drugs. Such stocks as paper, oils, metals, and other commodities could get attention since they have been battered by low worldwide prices for raw materials.
Investors also switched to bonds as interest rates increased. The yield on the benchmark U.S. Treasury 30-year bond Thursday was 5.37 percent, near its highest level since September 1998.
Indexes tracking cyclical stocks, drug and oil shares have risen modestly in the past few weeks, off recent lows. The Philadelphia Stock Exchange's bank index has ticked up almost 3 percent this week.
|
