Nasdaq ($COMPQ) briefly trades below 2K and moves to its 2005 low Friday. This tech-heavy index fell 8.63 points on the session, closing at 2,007.79. The Dow ($INDU) managed to gain 3.32 points to 10,629.67. The S&P 500 ($SPX) closed virtually flat, giving up just 0.56 points to 1,189.65. Volume was extremely heavy, but this was due to triple witching today. The NYSE trading 2.82 billion shares and the Naz turned over 2.10 billion shares. Market breadth was negative by a 12-to-20 and 12-to-19 margin on the Big Board and Naz respectively.
The Naz did break support intraday at 2K, but was able to recapture this mark by the close of trading. A jump in oil prices was definitely a negative for stocks, with crude prices up 4.2 percent on the week. Crude and gasoline prices reached new all-time highs during the week and this isn’t conducive for a bullish stock market. In fact, high oil prices had an impact on two economic reports this morning.
The University of Michigan announced that consumer sentiment fell in March although estimates were for a mild gain. Even though the employment situation is improving, high gasoline prices and concerns about rising interest rates took a toll on sentiment. The other report dealt with import and export prices, imports rising 0.8 percent, mainly on a rise in crude prices. However, when petroleum prices are excluded, import prices rose just 0.2 percent. This helps ease some concerns about the producer price index rising sharply in February.
Chip stocks fell nearly one percent Friday after a report showed that chip equipment orders fell 22 percent year over year. The book-to-bill ratio fell to 0.78, which means orders were down compared to bookings. However, Intel (INTC) was upgraded at Deutsche Bank to “Buy” from “Hold”, yet the stock closed flat on the session. Deutsche Bank feels the stock is undervalued given it is trading at an 8-year low.
One stock that was a winner Friday was Adobe Systems (ADBE). This software maker rose 6.14 percent after announcing strong earnings and a 2-for-1 stock split. However, ADBE did state it would get rid of its dividend to use the cash to buy back shares. Overall, the CBOE GSTI Software Index ($GSO) rose 0.05 percent on the session.
Next week will see fewer economic reports, but traders will be focused on inflation data from the PPI and CPI. Next Friday is also a holiday, so be aware of this. Overall, oil prices will continue to be a focus, but so will the major market indices as they approach support levels.
Jody Osborne Senior Staff Writer & Options Strategist Optionetics.com ~ Your Options Education Site
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