Wall Street hits resistance; LinkedIn soars in debut
The doubling of LinkedIn's shares in its market debut on Thursday dominated the stock market in an otherwise lackluster session in which equities rebounded from recent losses.
The doubling of LinkedIn's shares in its market debut on Thursday dominated the stock market in an otherwise lackluster session in which equities rebounded from recent losses.
Many investors have resigned themselves to a patch of economic weakness over the summer. Stocks have been resilient, only falling 1.5%, but the S&P is struggling to make headway above 1,340, an area that has met with repeated bouts of selling."Now on the way back up, just as far as the next few days are concerned, I think that 1,340 could stop the short-term bounce," said Ari Wald, equity strategist at Brown Brothers Harriman in New York.Wald said that 1,360 on the S&P 500 is a more significant resistance level which coincides with 76.4% retracement of the index's slide from its all-time high to the bear market low in March 2009. The index could struggle to break that level due to low trading volume, said Wald."We have seen very low volume on the upside and also marginally higher volume on the downside, which is also concerning," he said.Economic data painted a cloudy picture as slowing factory activity in the mid-Atlantic region and falling sales of existing homes offset weekly jobless claims that suggested the labor market was on track for recovery. "My bottom line, at least over the summer, is I that think there is enough valuation cushion to withstand a slowing of economic growth, so I think we have a cyclical slowing priced in," said Jack Ablin, chief investment officer, Harris Private Bank in Chicago.Shares of LinkedIn Corp, the social network company, more than doubled their IPO price in a jump reminiscent of the heyday of investors' love affair with Internet stocks. The stock rocketed to an intraday high of USD 121.97 -- or as much as 171 percent above its initial offering price of USD 45. The shares closed at USD 94.25, up 110%. The Dow Jones industrial average gained 45.14 points, or 0.36%, to 12,605.32. The Standard & Poor's 500 Index rose 2.92 points, or 0.22%, to 1,343.60. The Nasdaq Composite Index added 8.31 points, or 0.30%, to 2,823.31.Wald said he is looking for a correction back to as much as 1,230 on the S&P 500 over the summer, a seasonally weak period for equities.Investors have been rotating into defensive areas of the market, such as healthcare and utilities, which are less sensitive to market weakness.Semiconductor shares fell after Goldman Sachs cut its rating on Intel Corp, citing slowing processor shipments, rising competition and record capital expenditure levels this year. The firm also lowered its rating on Applied Materials as part of a wider downgrade on the semiconductor equipment sector. Intel shares lost 1.4% to USD 23.54 and Applied Materials dropped 1.2% to USD 14.33. The PHLX semiconductor index declined 0.9%.Stocks, bonds, gold and the euro are expected to fall in the three months after the end of the Fed's second massive bond-buying operation, also known as quantitative easing, or QE2, a Reuters poll of 64 analysts and fund managers found on Thursday. About 6.07 billion shares were traded on the New York Stock Exchange, NYSE Amex and Nasdaq, compared with the average of about 8.4 billion last year.Advancing stocks outnumbered declining ones on the NYSE by almost 3 to 2, and on the Nasdaq, the ratio was about even. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
