One could start wondering about the much-heralded Santa Claus rally.
True, the Dow Jones tech index has gained some modest ground so far in
December, with computer and Internet shares leading the troops. However, last
week, except for computer issues, most tech subsectors declined, taking the
Dow Jones Tech Index down over 1%. Also, looking back, Santa sometimes
skipped the sector in recent years, as its bubble burst -- the Nasdaq only
gained ground in December every other year since 1999, while the Dow Jones
tech index declined in that month in 2000, 2001 and 2002, only to shine again
in 2003. The bulls may say a replay of last year could be taking place, that
is, investors unload stocks in the first two weeks of the month, given strong
gains in November, but rush bidding again as the holiday approaches. Gushing
oil prices were not a factor last year, though. Aside from the holiday fever,
a rash of year-end economic data will be available this week, including the
all important November retail sales and CPI. Also, the Federal Reserve will
have its last opportunity to raise rates this year, and its economic
assessment will be closely watched at the onset of 2005. Talking to Globe and
Mail, Merrill Lynch's David Rosenberg is betting on a rate hike of 25 basis
points, not because it makes sense, given the soft job and holiday shopping
reports and that most central banks have moved to the sidelines, but because
the market expects such a move. "We hold the view that unless the Fed wants
to start cutting into some of the economy's muscle, it will press the pause
button after next week's" meeting, added the broker. Trends in the software
sector could also be another theme this week, amid quarterly releases from key
players such as Oracle. Following a users' conference last week, a string of
brokers, including Thomas Weisel, Bear Stearns and Robert W. Baird, were
upbeat about both the company and the macro picture. Oracle on 34th Street,
anyone?
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
information, please visit our web site at http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
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