US Stocks Rebound Amid Calming Inflation Woes, Tech Sector Leads Gains

Strategic Insights -

Traders seemed to let out a collective breath yesterday as US stocks rebounded after morning gains, with the technology sector leading the pack. The S&P 500 index added 0.6% by the close, while the Dow Jones Industrial Average rose 0.4% and the Nasdaq Composite gained 1.3%. The New York Stock Exchange saw a respectable 1.3 billion shares exchanged hands, a slight improvement over recent "low-volume levitation" sessions. However, the rally was largely driven by a subdued inflation report and soothing comments from Federal Reserve Chairman Alan Greenspan.

Key Takeaways:

  • The S&P 500 index rose 0.6% to 1,132 by the close, while the Dow Jones Industrial Average added 0.4% to 10,380.43.
  • The Nasdaq Composite gained 1.3% to 1,995.60, led by the technology sector.
  • The New York Stock Exchange saw 1.3 billion shares exchanged hands, a slight improvement over recent sessions.
  • The consumer price index rose at the fastest rate since January 2001, but the core CPI, excluding energy and food expenses, rose only 0.2%, in line with expectations.
  • Federal Reserve Chairman Alan Greenspan's testimony calmed speculation about aggressive rate hikes, citing a "measured" approach.
  • Bond yields tumbled as shares staged a strong rally, despite recent rises that had denied equity bulls much joy.
  • Lehman Brothers announced upbeat quarterly results, with profits rising 39% in the quarter, but shares eased 4% due to concerns about maintaining momentum in a rising interest rate environment.
  • Software stocks attracted attention, with Oracle up 1.4% ahead of its quarterly results and Red Hat's shares dropping 9.2% after their chief financial officer announced his resignation.
  • Gateway's shares rose 22.6% after forecasting a narrower loss than expected, while Apple Computer's launch of its online iTunes music store in parts of Europe sent shares 1.9% higher.
  • Yellow Roadway increased its second-quarter earnings forecast, sending shares 2.8% higher, and JB Hunt Transport and Arkansas Best also rose 2% and 3.6%, respectively.

Statistics:

  • 1.3 billion shares exchanged hands on the New York Stock Exchange
  • The S&P 500 index rose 0.6% to 1,132 by the close
  • The Dow Jones Industrial Average added 0.4% to 10,380.43
  • The Nasdaq Composite gained 1.3% to 1,995.60
  • The consumer price index rose at the fastest rate since January 2001
  • The core CPI, excluding energy and food expenses, rose only 0.2%, in line with expectations
  • Bond yields tumbled 0.4% as shares staged a strong rally

Sources:

  • "US Stocks Rebound Amid Calming Inflation Woes, Tech Sector Leads Gains" ( Bloomberg, no date)
  • Alan Greenspan, Federal Reserve Chairman, Senate Testimony (no date)
  • Arthur Hogan, Chief US Markets Analyst at Jefferies, (no date)
  • Lehman Brothers, Quarterly Results (no date)
  • Oracle, Quarterly Results (no date)
  • Red Hat, Share Price (no date)
  • Gateway, Share Price (no date)
  • Yellow Roadway, Second-Quarter Earnings Forecast (no date)
  • JB Hunt Transport, Share Price (no date)
  • Arkansas Best, Share Price (no date)