How Long Will The Resiliency Continue?

June 5, 2003
Vincent Mao

StocksÂ squeezed out another day of gains today. The major indices
are all managed to close in the green despite this morning’s less-than-stellar
economic reports. Weekly jobless claims once again rose while factory orders
fell by the most in over a year and a half. The Dow did dip below the
psychological 9,000 level intraday but managed to close back above it. The blue
chip average struggled in the red for most of the session thanks to Johnson &
Johnson
(
JNJ |
Quote |
Chart |
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PowerRating) and Microsoft
(
MSFT |
Quote |
Chart |
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PowerRating). However the index did managed to
end in the green after a late-session rally. Morgan Stanley lowered its 12-18
month price target on JNJ to $49 to from $59 based on increasing competition for
its anemia and arthritis drugs. Microsoft is under pressure after CEO Steve
Ballamer allegedly sent out a company email citing Linux as a threat to the
company. Bonds relished on the worse-than-expected economic data, but still
finished the session lower. The major averages did show great resiliency today
but tomorrow we have the ever important non-farm payrolls and the unemployment
rate to deal with.Â

In economic news, Initial
Jobless Claims increased by 16,000 to 442K. This was the sixteenth week
above the critical 400K level. The less volatile four-week moving average also
increased to 430,050 from 427,500. Factory Orders for April fell by 2.9%
vs. an expected drop of 1.8%. The Commerce Department reported that this was the
biggest drop since November 2001.

The 10-year U.S. Note
is -110 at 119 085.

The dollar is -1.20 at
92.59.

Gold is +6.10 at 369.50.

Crude Oil +0.77 at
30.74.

Volume is at
1,600,000,000 on the NYSE, and at 2,400,000,000 on the Nasdaq.

Market breadth is positive,
with NYSE advancing issues over declining issues by a ratio of 1.66, and up
volume over down volume by a 2.13 ratio. Nasdaq advancing issues over declining
issues at 1.58, and up volume over down volume is at a 1.51 ratio.

Top Dow stocks are:

Stocks in the news:

Albertson’s
(
ABS |
Quote |
Chart |
News |
PowerRating) is
lower by 1.87% on double its average volume. The company reported first-quarter
results of 47 cents a share compared to a loss of 40 cents a share for the same
period a year ago. However Albertson’s did miss analysts’ estimates by 3 cents.
For fiscal 2003, the company is expecting results between $1.70 to $1.75
compared to estimates of $2.04.

Ann Taylor
(
ANN |
Quote |
Chart |
News |
PowerRating) is
higher by 5% on heavy volume. The retailer reported total sales in May rose
19.1% and comparable same store sales rose 9.4%. Ann Taylor also raised
second-quarter guidance to between 39 to 41 cents a share from 35 to 37 cents a
share or higher than estimates of 36 cents a share.

After yesterday’s jump,
Electronic Data Systems
(
EDS |
Quote |
Chart |
News |
PowerRating) is off by 5% today. Smith Barney
downgraded the stock from to “underperform” from “inline” on valuation. Smith
Barney also based the downgrade on the belief that the company will lower its
profit targets.

Payless Shoesource
(
PSS |
Quote |
Chart |
News |
PowerRating)
is lower by 2.75% on heavy volume after the company reported that same-store
sales in May fell by 10%. The company also warned that it will miss its
second-quarter targets of 42 cents a share.

Roadway
(
ROAD |
Quote |
Chart |
News |
PowerRating) is
off by 15% on more than ten times its average volume. The truck company warned
that second-quarter results will be less than half of what Wall Street was
expecting. The company said that pricing pressure and less-than-expected tonnage
was to blame.

Electronics retailer BestBuy
(
BBY |
Quote |
Chart |
News |
PowerRating) is higher by 6% on heavy volume. The company sees first-quarter
earnings coming in between 19 and 21 cents a share compared to estimates of 17
cents a share.

Vincent Mao

How Long Will The Resiliency Continue?

BUY THE FEAR, SELL THE GREED

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