[BRIEFING.COM] With stocks fresh off an impressive two-day rally, another round of hawkish Fed speak sparked some concern that stocks may have gone up too far too fast, prompting investors to lock in some profits. The Dow, SnP 500 and Nasdaq had surged 2.8%, 2.7% and 3.5%, respectively, since Wednesday, but with no notable economic data and an earnings calendar similarly devoid of influential releases, investors' struggled to get a clear indication that corporate profit growth will hold up in the face of rising interest rates.
Hardest hit on the day was the Nasdaq, which was not that unusual since it has also turned in the best performance of late. Renewed concerns that the Fed may go too far with its tightening, as St. Louis Fed President William Poole became the latest central banker to echo Fed Chairman Bernanke's hawkish commentary, continued to question the Tech sector's growth prospects, despite Oracle (ORCL 14.19 +0.49) raising its Q4 outlook. Poole said core inflation is above his "comfort zone" and that the Fed may need to act since U.S. data may understate inflation because of rising oil prices.
Technology was also in focus following Microsoft (MSFT 22.10 +0.03) Chairman Bill Gates' decision to step back from his day-to-day duties, but the start of a new era beginning to take hold at the world's largest software maker did little to help the Technology sector, which consolidated alongside three of yesterday's other big winners -- Financials, Energy, and Materials -- in negative territory.
Even though there was a last ditch effort by the bulls to close the Dow in positive territory, which ultimately stalled, there was little conviction behind the late-day recovery as breadth clearly favored declining issues at both the NYSE and Nasdaq on heavy volume due to quadruple witching options expiration. Hewlett-Packard (HPQ 33.04 +1.16) and Intel (INTC 18.30 +0.18) were the standouts on the blue chip index, but they too could not provide enough of a lift to keep the short-covering rally intact going into the weekend. NYSE Adv/Dec 1194/2053...Nasdaq Adv/Dec 1025/1994
DOW Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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