Market Rallies Despite Intel Plunge, Fuels Question on Sustained Rally

Strategic Insights -

Traders bought shares in department stores and oil companies ahead of a busy holiday weekend and potential higher oil prices, offsetting the slump in Intel and other computer-related stocks. The market's surge lifted indices such as the Dow Jones industrial average and the Standard & Poor's 500, but analysts are uncertain about the sustainability of the rally due to upcoming economic reports and market events. The stock market rise has been attributed to anecdotal reports of strong retail sales and a tighter oil market due to new insurance requirements for oil tankers.

Key Takeaways:

  • The Dow Jones industrial average rose 27.26 points to 3,718.37, while the Standard & Poor's 500 increased 2.50 points to 449.47.
  • The Nasdaq composite index edged higher by 0.07 point to 719.12, despite being in a faltering position.
  • The market's rise was largely driven by traders buying shares in department stores and oil companies, anticipating a busy holiday weekend and potential higher oil prices.
  • Analysts such as Michael Metz and Alfred E. Goldman are uncertain about the sustainability of the rally due to upcoming economic reports and market events.
  • The triple witching expiration of options, a market event that usually causes market volatility, is expected to impact the market this week.
  • Intel's stock fell 2 3/8 to 60 3/8, while I.B.M. dropped 7/8 to 70 5/8, following the announcement to halt sales of personal computers using Intel's Pentium microprocessors.
  • Dell Computer, a manufacturer that uses Pentium chips, fell 1 1/4 to 39 5/8, and CompUSA, a major computer retailer, fell 1/2 to 13 3/8.

Statistics:

  • The Dow has fallen more than 300 points from its intraday high of 3,942 on October 20 to its intra-day low of 3,639 on November 23.
  • The Dow rose 27.26 points, the Standard & Poor's 500 increased 2.50 points, and the Nasdaq composite index edged higher by 0.07 point.
  • Intel's stock fell 2 3/8, while I.B.M. dropped 7/8, with over 8,700 trades of more than 16.2 million shares.

Sources:

  • Oppenheimer & Company (Michael Metz, chief investment strategist)
  • A. G. Edwards & Sons (Alfred E. Goldman, director of market analysis)
  • New York Times (report on tighter oil market due to new insurance requirements for oil tankers)
  • I.B.M. press release (announcement to halt sales of personal computers using Intel's Pentium microprocessors)