Traders remain split on whether to buy or sell stocks, with the major market indices going separate directions on Wednesday. The Dow ($INDU) finished with a gain of 25.42 points to close the session at 9,061.74. Early in the session, the Dow tested support at 9,000 and it held. The S&P 500 ($SPX) rose just 0.17 percent, right in the middle of its trading range for the day. The Nasdaq ($COMPQ) was unable to move into positive ground, falling 20.82 points to 1,652.68. Volume picked up on Wednesday, with the NYSE trading 1.73 billion shares and the Naz turning over 1.83 billion. Market breadth was negative by a 15-to-14 and 19-to12 margin on the Big Board and Naz respectively.
The Naz was unable to overcome a 6.42 percent loss in shares of Cisco Systems (CSCO). The networking giant matched earnings estimates last night, but was cautious about the future. With the stock seeing such a large advance heading into the announcement, traders decided to sell the news on Wednesday. The AMEX Networking Index ($NWX) was hurt by the news as well, falling 1.89 percent.
The broader market was encouraged by a recovery on Wednesday in the bond market. Bonds have been hit hard during the last six weeks, so Wednesday’s bounce was welcomed. However, it is debatable whether this strength can continue for bonds and the stock market. In fact, the Dow and SPX both gave up ground heading into the close of trading.
In sector action, biotech stocks fell as measured by the Biotechnology Index ($BTK). This index declined 1.65 percent, with shares of Invitrogen Corp (IVGN) off 4.25 percent. Though not part of this index, ICOS Corp (ICOS) also had a negative impact on the sector. ICOS shares fell 16 percent after warning that 2004 losses would be twice as large as originally forecast. Overall, the CBOE GSTI Internet Index ($GIN) saw the largest losses, falling 3.38 percent.
The CBOE Market Volatility Index ($VIX) fell 3.36 percent on Wednesday, closing at 23.30. However, the VIX reached an intraday high of 25.88, moving above the upper end of its three month trading channel. The VIX has been trading between 20 and 25 for more than three months, which has led to sideways trading in the major market indices as well.
Jody Osborne Senior Staff Writer & Options Strategist Optionetics.com ~ Your Options Education Site
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