MIDDAY ACTION, August 29

Stocks rebounded from two days of losses Wednesday morning, with investors stepping in to buy shares at cheaper prices. After a two-day 337-point drop, the Dow Jones Industrial Average () was trading up 110 points in midday action.

Twenty-six of the Dow thirty are in positive territory. Intel () led the advance, with a 76 cent, or 3.2% gain. Home Depot (), General Motors (), and Hewlett Packard () were also sporting solid gains.

Altria () is seeing active trading. Shares rose early in the day on talk the company would announce a spin off its international tobacco unit. The company did indeed make the announcement, but shares are trading lower on the news—perhaps because the spinoff won’t happen any time this year. After hitting a high of $70.98 early in the trading day, MO now sits near unchanged at $60.10.  

Many of the market’s momentum names are seeing big gains, however. Apple Computer () is up $5.20 to $132.02 after Bloomberg reported that it will unveil a new version of its iPod next week. Seagate () rose after the company raised revenue guidance for the first quarter. STX is up $1.28 to $25.74. Research in Motion () and SanDisk () continue to see relative strength during market rallies. RIMM is up $2.95 to $80.13 and SNDK added $1.37 to $53.40.

Energy-related names are higher as crude oil prices gather some momentum. Crude rose $1.43 to $73.13 after the latest weekly inventory data from the Energy Information Association showed larger than expected draws of gasoline and crude stockpiles.   

Meanwhile, bonds are losing some of their flight-to-safety bid as stocks recover. However, the benchmark ten-year Treasury bond is holding steady and its yield remains near 4.52 percent.

The action in the stock market is constructive, but it follows a two-day sell-off that was probably a bit overdone. Thin trading due to the fact that many players are on holiday is exacerbating volatility somewhat. In addition, with no economic data on tap, there has been little to real news to guide trading. So, after the initial morning rally, trading might turn a bit more lethargic this afternoon.

Frederic Ruffy
Senior Writer
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