(March 2) – “Don’t fight the Fed. That is one of Wall Street’s most venerable and trusted dictums. But those investors who are taking the opposite approach, going so far as to flout the Fed, are having all the fun these days,” writes Gretchen Morgenson in The New York Times.
“While the Dow Jones industrial average and the Standard & Poor’s 500-stock index fell sharply last week on worries of higher interest rates, the Nasdaq composite rolled on to record highs. The composite closed on Friday at 4,590.50, up 4 percent on the week.
“Though the Nasdaq appears to be strong, there is less to its move than meets the eye. Put simply, fewer and fewer technology stocks have star power today. Now, even this crucial sector, which drives the composite, is becoming badly bifurcated.
“Shares in biotechnology, semiconductor companies and telecommunications equipment makers remain hot, but other groups are losing steam. For example, only 34 percent of e-commerce stocks are up this year, according to Credit Suisse First Boston. And computer retailers are down 9 percent.
“A result: technology as a whole is up just 2 percent this year, lagging well behind the 9 percent gain in utilities stocks — one of the unsexiest sectors of all.
This desultory performance from what had been the most incendiary sector of the market may be tied to a creeping realization among investors that sales and earnings growth are slowing at many technology companies.