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July 31, 2000

Nasdaq Reverses on Bargain-Hunting
By Jennifer Hughes, Financial Times

Time to Start Bargain-Hunting? No Way ... Weiss comments

NEW YORK - Technology stocks tried to stage a comeback in early trading on Monday after Friday's sell-off. At around 1505 GMT, the Nasdaq Composite was up 53.06 at 3,716.06. The Dow Jones Industrial Averages was 58.06 higher at 10,569.23 and the broader Standard & Poor's 500 was 6.8 higher at 1,426.69.

On Friday, second quarter gross domestic product growth was far higher than expected, prompting Wall Street to continue its recent sell-off amid fears the US economy was not slowing as expected. Annualised growth for the quarter was 5.2 per cent against expectations of a 3.9 per cent rise.

The figures increased fears that the US Federal Reserve will look to raise rates again at its August meeting, and Wall Street is expected to trade cautiously ahead of non-farm US payroll data out on Friday which should give a clearer picture of the economy.

Don't let today's bounce fool you. Some investors think that they'll find some great bargains after Friday's drop. They're the fools. The tech stocks that got hit on Friday were extremely overvalued. After Friday's drubbing, they're just plain overvalued.

Besides, the economic outlook didn't change over the weekend. Higher interest rates and weaker profits continue to loom on the horizon.

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