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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (12430)	11/7/2003 8:26:20 PM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 95420

The weekly wrap from Briefing.com - discusses the effect of potential interest rate increases on market performance. <<Weekly Wrap : The market got about all it could ask for this week in that the two most important items of the week - Cisco's (CSCO) earnings report and the October employment report - were nothing short of encouraging. That point notwithstanding, the broader market struggled to make much headway as blue chip stocks took a breather while small- and mid-cap shares toed the line along with the indefatigable technology sector. The final numbers tell the story. The Dow was up 0.1% this week and the S&P 500 was up 0.2%. Meanwhile, the Russell 2000, the S&P 400 Midcap Index, and the Nasdaq Composite were up 2.8%, 2.1%, and 2.0%, respectively. Those strong gains were led by technology stocks, which stayed in rally-mode following Monday's upbeat report on September billings from the Semiconductor Industry Association. As one might expect, the report fueled continued buying interest in the semiconductor and semiconductor capital equipment stocks that contributed to a 6.0% rally in the SOX Index. The latter, in turn, hit a new 52-week high, and as it so happens, each of the major indices hit new 52-week highs as well this week. Other sector standouts included apparel, tobacco, telecom equipment, electronic manufacturing services, securities, aluminum, railroad, restaurant, and regional bank. On the flip side, the biotech, managed care, airline, integrated telecom, paper, and gold sectors were among the notable weak spots. Despite the solid gains in the Nasdaq, and small- and mid-cap indices, it was the underperformance of the blue chip averages that seemed to resonate more with market participants when the week came to a close. The reason being is that they failed to rally in a meaningful way to both Cisco's encouraging report and the better than expected October employment report. The former suggested there has been a welcome improvement in technology spending, whereas, the latter clearly repudiated the jobless recovery argument. For October, nonfarm payrolls increased 126K, and after revisions to August and September data, showed a 286K increase in nonfarm payrolls over the last three months. The limiting factor was rooted in concern that the improving job picture might invite a Fed tightening sooner rather than later. Briefing.com continues to believe that a tightening isn't likely until 2H04, but nonetheless, the anticipation of higher rates was enough to stymie blue chip stocks, especially after the Reserve Bank of Australia and the Bank of England both raised their key lending rates earlier in the week. This fear of higher interest rates promises to be an impediment for the market going forward and should serve to slow the speed at which the market has been climbing since March, and in the case of the Nasdaq, since last October. At this juncture, though, concern about higher interest rates won't undercut the market altogether given the outlook for strong profit growth in Q4, the persistence of low inflation, and the realization that higher market rates would be more of an offshoot of strong economic growth than rising inflation. -- Patrick J. O'Hare, Briefing.com>>