NEWS AND COMMENTARY
May 25, 2000
Intel chip move boosts Nasdaq
(excerpted) By Tom Foremski, Financial Times
After 5 straight days of falling, a bounce is overdue...Weiss comments
SAN FRANCISCO - US technology stocks staged a strong rally on Wednesday sparked by news that Intel would invest $2bn in a chip-making facility, a move that will address a chip shortage affecting computer manufacturers worldwide.
The technology-laden Nasdaq stock index jumped 228 points to 3,270 after hitting a low in the early afternoon of 3,042, compared with Tuesday's close of 3,164.
The index has been falling steadily since its record high of 5,132 on March 10.
Of course the Nasdaq is bouncing, it has been on a continuous downward spiral for the last five days. And even yesterday, before some investors were crazy enough to start buying, the Nasdaq reached a low of 3,042. That's over a 40 percent decline from it's intra-day high of 5,132 on March 10!
Expect this rally to be short-lived. Look for it to die out in the next day or two. Right now, Wall Street's looking for any reason to start buying tech stocks, as this Intel news illustrates. But this paltry news piece doesn't change the current economic environment. Rising interest rates, zooming wages, and out-of-control spending have not abated.
This short-lived bounce will ultimately be a hiccup in the bear market's banquet.
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