[BRIEFING.COM] The market bounced back after several days of losses as some upbeat news from tech giant Dell and a sense that the market was oversold on a short-term basis renewed some enthusiasm for stocks and attracted bargain hunters looking for reasonable valuations and a market bottom.
Providing the bulk of early momentum from a news standpoint, since there was nothing in the way of economic data scheduled, was Dell (DELL 24.57 +0.62). Despite merely matching lowered expectations, DELL surged 2.6% amid reports that a $3 bln restructuring and a shift toward using AMD chips for some its servers may improve profitability at the struggling PC maker. The stock, fresh off hitting a three-year low Wednesday and under pressure ever since it warned Wall Street last week that sales and profits would miss forecasts, eased some of the uncertainty about a possible slowdown in tech spending. More notably, even though the tech-heavy Nasdaq only posted a modest gain and is still in negative territory for the year, Dell's news helped the Composite snap an eight-day losing streak. The index has not fallen for a ninth straight day since 1984.
Also helping the influential Technology sector was the return of some convincing leadership from chip stocks. Even though Dell's decision to end an exclusive 22-year agreement with Intel (INTC 18.36 -0.29), which left INTC shares flirting with new lows not seen in more than three years before closing at a new 52-week low, Intel's decline was more than offset by an 11.5% surge in Advanced Micro Devices (AMD 34.95 +3.60). A 13% surge in shares of Marvell Technology Group (MRVL 56.22 +6.51), which beat forecasts and raised its FY06 revenue outlook, also helped the PHLX Semi Index claw its way back into the plus column for 2006 with a 3.2% gain. Marvel and Intel are both suggested holdings in our Active Portfolio.
With rising commodity prices and higher interest rates playing into why we've maintained a Neutral market view since early February, some relief on both fronts also offered some relief. Gold futures closed down 3.5% at $657 an ounce and posted its biggest weekly decline since 1983, which could signal an end to the precious metal's rally and attraction as a hedge against inflation. Crude oil prices fell 1.4% to $68.45 a barrel amid eased worries about Iran's nuclear ambitions while Treasuries recorded their biggest weekly gain in more than a year, knocking the yield on the 10-yr note down to 5.04%. However, the lack of conviction on the part of buyers as reflected in the market internals, it's evident that investors remain somewhat cautious as we enter a seasonally sluggish period for stocks with inflation concerns and uncertainty about Fed policy still acting as an overhang. NYSE Adv/Dec 1932/1315...Nasdaq Adv/Dec 1704/1331
DOW Price at posting:
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