Ahead of a three-day weekend signaling the beginning of the summer doldrums, investors spent much of the week selling technology leaders. Barring some shocking economic report or a significant merger, tech stocks will be trading on their own merits for a change.
For the week, the Dow Jones industrial average fell 326 points to 10,299.24. The Nasdaq composite shaved off 185 points to finish at 3,20511.
This week's sell-off reached a crescendo Tuesday when the Nasdaq closed off 200 points to 3,1.64.29, its lowest close since Nov. 10 and a staggering 38 percent off its all-time high set in mid-March.
"No one wants to commit to technology because every time they do they are getting their fingers blown off," Guy Truicko, portfolio manager at Unity Management, said Tuesday. "Until we get some kind of feeling that Fed Chairman Alan Greenspan is done raising rates, there is not much of catalyst to drive us north right now."
Actually, the catalyst came late Wednesday when, as the Nasdaq was headed for another triple-digit loss, Intel (Nasdaq: INTC) saved the day, announcing it would spend another $2 billion this year to ramp up production to meeting rising chip demand.
That little glimmer of good news was enough to get money pouring back into the tech sector. For the day, the Nasdaq gained 106 points and made a 200-point turnaround in less than three hours.
Analysts were encouraged by Wednesday sharp rebound even though techs gradually slipped lower for the rest of the week. They all also point out that most the sizeable losses racked up in the past few weeks has come on extremely light volume.
On Friday, the government reported U.S. durable goods orders fell 6.4 percent in April, a far cry from economists' predictions of a rise of 0.3 percent. Analysts said the numbers showed a slight cooling in the red hot U.S. economy, but noted the figure tends to be very volatile.
"I don't think the numbers are a big deal," said James Volk, co-director of institutional trading at D.A. Davidson & Co. "I really think the markets are tired. They are in correction mode."
All this bodes well for traders anxiously awaiting some type of signal from the Federal Reserve Board. After the half-point increase two weeks ago, everyone's hoping the economy will cool just enough to thwart another half-point bump later this summer.
This lack of activity makes the ongoing Microsoft (Nasdaq: MSFT) soap opera the only show in town. And it's going to be a marathon.
Judge Thomas Penfield Jackson raised some eyebrows this week exploring possible ways to break up the company -- at one point considering a three-way breakup -- before telling the government to get a final order ready for him.
In the meantime, the company would face restrictions on its conduct. Microsoft is expected to ask an appeals court to suspend those provisions, too. Both sides agree punishment is barred by law, but cannot agree whether breaking up the company constitutes punishment.
Looking ahead to next week, there's very little to note.
Fatbrain.com (Nasdaq: FATB) will report its first-quarter results with analysts expecting a loss of 88 cents a share.
Last quarter, Fatbrain.com posted a loss of $10 million, or 79 cents a share, on sales of $11.9 million.
Also, UbiquiTel (Proposed ticker: UPCS), a Sprint PCS (NYSE: PCS) affiliate, will make its debut with 14.5 million shares priced at between $12 to $14 a share.