AMZN again in WSJ lead-in:
"Technology stocks were solidly higher in afternoon trading Tuesday, recovering from a multisession sell-off that culminated in a 140-point drop in the Nasdaq Composite Index on Monday."
Tech Stocks Regain Part Of Monday's Deep Declines
Amazon Drops Again but Dell Rebounds As Nasdaq Gains 76 Points, or 5.1%
By LISA BRANSTEN
THE WALL STREET JOURNAL INTERACTIVE EDITION
SAN FRANCISCO -- For the time being at least, the bulls are back in
control on Wall Street, with technology investors leading the charge.
The Nasdaq Composite rose 5.1% and Morgan Stanley's high-tech 35 index
gained 7.3% as battered Internet and computer stocks bounced back smartly
from their three-day drubbing.
The gains weren't easy. Tuesday's rebound
didn't come until after stocks had taken a
gut-wrenching roller-coaster ride. The
technology-heavy Nasdaq composite opened
higher Tuesday before dropping nearly 24
points -- only to recover near midday and close
the session up 76.32 points, to 1575.57. The
composite is still down more than 200 points
since Wednesday's close.
The Morgan Stanley index, which tracks large
technology stocks, rose 34.89 to close at
515.04. Meanwhile, the broader Standard & Poor's 500-stock index gained
37.04, or 3.9%, to 994.32.
Technology sector leaders posted strong, if not
quite stunning, gains. Microsoft rose 5 5/16 to
101 1/4, Intel added 4 13/16 to 72 and Cisco
Systems rose 8 1/8 to 90, all on the Nasdaq
Stock Market.
Internet stocks were mostly higher, with slight
recoveries among many issues. Yahoo! gained
3 1/4 to 72 1/4, but Amazon.com slid another 3
51/64 to 79 61/64 -- after earlier in the day
dropping as low as 65. Merrill Lynch initiated
coverage of Amazon stock with a "reduce"
rating, and put its long-term rating at "neutral."
Amazon had dropped 22 9/64, or 21%, on
Monday.
Lycos added 5 1/16 to 26 3/4 and CMG
Information Services, which owns a minority
stake in Lycos and other Web start-ups,
recovered 3 7/8 to 42, after dropping 11 7/8, or 24%, Monday. Both stocks
trade on Nasdaq.
Dell Computer, among the big losers Monday, jumped 8 3/8 to 108 3/8 on
Nasdaq. Compaq Computer added 2 to 29 15/16 on the New York Stock
Exchange. CIBC Oppenheimer raised its rating on the stock of Compaq to
"strong buy" from "buy."
Despite the glimmer of light at the end of a horrible tunnel, however, few
Wall Street observers were willing to say that Tuesday's activity signaled the
end of the sell-off in technology shares or the broader stock market.
Jimmy Toes, head of Nasdaq trading at Merrill Lynch & Co., said the day's
gains seemed like the normal reaction to a sell-off as fast and furious as
Monday's.
Stocks "just got oversold in the last 45 minutes [Monday] and a lot of these
things are starting to look attractive for long-term players," he said. For
example, he said, Intel, which had risen as high as 102 at the beginning of
last month looked like a pretty good value at its Monday close of 71 3/16.
On Tuesday, shares of Intel regained 3 5/16 to close at 74 1/2.
But, Mr. Toes added, there's no way to know if Tuesday's action was a
brief respite from selling or a sign of new confidence in the market.
"Whether there's a change in sentiment remains to be seen," he said.
And despite the recent losses, stocks in some sectors still look richly valued.
In the personal-computer sector, for example, PC demand remained strong
in August, said Kimberly Alexy, an analyst at Lehman Brothers. But she
added that "despite the sell-off, PC stocks aren't trading at historic lows, so
investors looking for shelter in 'bottomed-out' names may need to look
elsewhere."
One factor that could weigh heavily on the technology sector for the next
few months is uncertainty among investors about whether to remain invested
in the sector or cash out now.
Since early June, the flow of funds into and out of technology mutual funds
has been erratic, said Robert Adler, president of AMG Data Services, an
Arcata, Calif., firm that tracks fund flows.
For the seven days ended July 22, investors withdrew $208 million from the
72 technology funds AMG tracks (total assets of $21.4 billion), and over the
next two weeks took out another $116 million. The next two weeks they
reversed course and poured $193 million back in as the market began to
recover. Then for the seven days ended Aug. 26, investors changed
direction once again and pulled $148 million out of the funds.
"At no time since we started collecting data"
in 1992 "have fund flows been this volatile,"
Mr. Adler said. "It seems to indicate some
confusion about whether to reallocate to
other sectors."
Elsewhere, Intuit was up 6 1/16 to 40 1/14 on
Nasdaq. Intuit said a California court threw
out a lawsuit seeking damages from alleged Year 2000 compliance problems
in Intuit's Quicken personal-finance program (see article).
America Online rose 4 1/16 to 86 on the Big Board. Everen Securities raised
its rating on the on-line service's stock to "outperform" from "market
perform."
Iomega slipped 5/16 to 3 9/16 on Nasdaq. The storage-products maker
lowered the price of its Jaz two gigabyte external and internal drives to $399
from $499. Iomega cut prices on the drives in June to $499 from $649.
Iomega manufactures personal read/write storage products |
