Rocky road for investors to continue

On Monday in the US, the Nasdaq, led by its largest stock, Microsoft, tumbled 4.4 per cent to 3482 points. Bill Gates' software Goliath faced further rumours of a potential break-up and suffered one if its largest ever one-day drops, falling 15.6 per cent to $US66.56 a share - down from a March high of $US111.88.

However, bargain hunters feasted on the Nasdaq overnight, which again enjoyed one of its most successful days immediately after one of its most devastating. Last night the Nasdaq rallied 6.57 per cent to 3711 points. Microsoft followed suit rising 2.75 per cent to close at $US69.38.

The Nasdaq 100 index faired even better, closing at 3621 points - up 7.99 per cent. Similarly, Wall Street traded positively overnight, with the Dow Jones Industrial Average rising 2.01 per cent to 11,124 points.

Ernst and Young consultant, John Edwards, said investors looking to take advantage of the market's current volatility should stick with stocks that were making genuine profits.

"Investors are starting to get a lot fussier about the promises that companies make in their prospectuses," Edwards said.

He said there was still a lot of growth in technology stocks over the longer term, but said he did not believe the market had bottomed out just yet.

"A lot of people forget that the Nasdaq is still a lot higher than it was last October," Edwards said.

Edwards said Microsoft had suffered from a combination of the downturn in the current market, and rumours regarding the results of the recent anti-trust lawsuit against the US Department of Justice. He said he thought Microsoft was a "good buy" at its current price.

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