Wall Street, which is usually ahead of the curve, has investors wondering if the usual summer lull already happened -- in the spring.
Typically, the markets take the summer off. Light trading and slow news are usually the norm.
But the Nasdaq jumped 19 percent in last week on soft economic data. To Wall Street it's great news when more people are out of work than the previous month. Now pundits reckon that the Federal Reserve may not tinker with interest rates at all when it meets at the end of June. Just a few weeks ago, the Fed was expected to jack up interest rates.
Investors reading the economic tea leaves all came to the same conclusion -- buy tech stocks now.
Those familiar tech names -- JDS Uniphase, Broadvision, Intel among others -- all had banner days Friday.
Is it party time for techs? Not so fast. The only thing investors can count on is volatility. The Nasdaq proved in April and May it could fall 20 percent in a week just as easily.
The Nasdaq is down about 1,200 points from its all-time high of 5,048 set in March. Meanwhile, good news is hard to come by. High-flying Cisco Systems tops estimates by a wide margin, but investors worry that it can't keep up the growth. Lycos finally gets bought out at a big premium and the stock tanks. Mergers and acquisitions are panned as soon as they're announced. Dot-coms are on the ropes.
The tech heavy Nasdaq is still down more than six percent for the year and 24 percent from its March high. Friday's volume was decent, but most days have been light.
Simply put, last week's market psychosis could turn in the other direction quickly. Sure, the economy is apparently slowing, but the "what ifs" are already piling up. What if stocks keep rallying and people start spending money again? What if the Fed's previous interest rate hikes do too much damage?
What if you just bought some solid stocks and held them for five years or so? That's probably the best "what if" of the bunch.
Given the volatility, it's not surprising that some analysts are pushing for a breather.
"Summer camp might be a good alternative to Internet investing," said Michael Graham, an analyst with Robertson Stephens. "We think there's a good chance our group of stocks will stay flat through the summer, as investors continue recovering from their recent bruising and summer slowness sets in."
Graham said it makes sense to stick with the Internet leaders. Yahoo! and America Online are well below 52-week highs.
Strong earnings could be irrelevant as most investors go Fed watching. Chuck Hill, director of research at earnings tracking firm First Call, said first quarter earnings were stellar, but few investors noticed.
"Public companies threw one helluva of a party during the 1Q00 earnings reporting season, but it appears nobody came," said Hill in a research note. "The 1Q00 earnings reporting season was a successful one in every way except for the most important one. The spectacular results were not able to propel the market upward."
The only thing folks can agree on are the mileposts this summer. Here's a look:
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