SAN FRANCISCO (08/03/2000) - The Dow enjoyed a small spike Wednesday on evidence of slowing economic growth: Housing data revealed that new home sales fell 4 percent in June, bringing the figure 13 percent below June 1999 levels.
The Dow rose 0.76 percent in response, gaining 80.58, to 10687.53. The Nasdaq wasn't similarly buoyed, however, and dropped nearly the same amount, 0.73 percent, or 27.06, to 3658.46.
The volatility and indecision that have plagued the market this summer can be expected to continue for at least another month, if not longer, analysts say.
This can partly be explained as a seasonal slump. The Nasdaq historically falls in August, a sleepy month associated more with beaches and vacations than stocks and portfolios.
"The Nasdaq is just trying to find something to do," jokes Andrew Barrett, tech strategist at Salomon Smith Barney.
But the market's problems aren't due solely to summer doldrums, Barrett says.
Investors are wary, he says, and will need reassurance before returning to the market.
"They're waiting for the Fed and for earnings to give them clarity," he says.
"They still like tech and telecom, they still believe in the story, they still like it because it's a very sexy business. But they're nervous."
If the Fed refrains from raising interest rates, and if third-quarter earnings come in strong, the market could enjoy a jump in the fourth quarter, observers say. But until then it seems indecision will pervade, as it did Wednesday, with nearly all sectors turning in mixed performances. Large-cap techs, the Internet sector and the Dow all had mixed results.
A few IPOs once again broke through to enjoy gains: Opnet Technologies Inc., a maker of network management software, rose 42 percent Wednesday, adding $5.50 to its $13 offer price. And Israel-based Floware, a broadband company, jumped nearly 40 percent, rising $5.14, to $18.14.