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Market Update

The Week in Stock and Funds

The old economy says stop, the new economy says go.

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Tech stocks once again paced the market, as investors bet on a second-half recovery for the sector. Despite indications from Federal Reserve Chairman Alan Greenspan that further interest-rate cuts may be forthcoming, so-called old-economy stocks, which have led the pack for much of 2001, took a breather. The Dow Jones Industrial Average slipped 2.6% for the week to 11,105, while the broad-based S&P 500 fell 1.2% to 1,277. Meanwhile, tech stocks propelled the Nasdaq Composite index to a 2,251 close on Friday, giving it a gain of 2.4% for the week.

Fund Category Returns
Specialty-technology funds posted the best returns for the week through Thursday, rising 3%. Tech stocks rallied sharply on Monday, with big-cap issues such as Cisco Systems (CSCO) and Sun MicroSystems (SUNW) posting double-digit single-day gains. Market analysts attributed the spikes to investors' desire to buy into big-cap tech before prices got too high, which is another way of saying they have no idea why the stocks ran up.

Scott Cooley does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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