Here’s A Bright Spot In Today’s Action
The
markets underwent another day of selling, as a 1-2 combo of
disappointing economic news and earnings helped put the bears on the attack.
Price action gapped lower on the heels of pessimistic outlooks from Dow
components IBM and
Microsoft, then dropped off again after a worse-than-expected
Michigan sentiment number. The three major averages closed at the bottom of
their daily ranges, below their 50-day moving averages. Confirming the move were
weak performances from the semiconductors, broker/dealers, and retail.
The Dow Jones Industrial
Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating) closed -1.27% at 8,586.74. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
closed -1.40% at 901.78. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed -3.33% at
1,376.20.
The only positive sectors on
the day were healthcare
(
$HMO.X |
Quote |
Chart |
News |
PowerRating), +2.01%, and healthcare
providers
(
$RXH.X |
Quote |
Chart |
News |
PowerRating), +1.98%, and banks
(
$BIX |
Quote |
Chart |
News |
PowerRating), +0.38%.
The day’s biggest losers were
semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), -5.74%, networking
(
$NWX.X |
Quote |
Chart |
News |
PowerRating),
,-4.97% software
(
$GSO.X |
Quote |
Chart |
News |
PowerRating), -4.90%, and Internet
(
$MOX.X |
Quote |
Chart |
News |
PowerRating),
-4.48%.
In economic news, the
University of Michigan’s preliminary sentiment number disappointed at 83.7
vs. an expected 87.0. Industrial production fell 0.2% vs. expectations of
a 0.2% increase, capacity utilization came in at 75.4% vs. an expected
75.7%, and the trade balance showed a deficit of $40.1 billion vs. an
expected $36.4 billion.
The Ten Year Note
(
TYH3 |
Quote |
Chart |
News |
PowerRating) was +160 at 113 255.
The U.S. Dollar
(
DXH3 |
Quote |
Chart |
News |
PowerRating) was -0.23 at 100.89.
Volume was average,
with the NYSE coming in at 1,318,160,000 and the Nasdaq at 1,621,423,000.
Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.94, and down
volume over up volume by a 3.19 ratio. Nasdaq declining issues over advancing
issues came in at 2.03, and down volume beat up volume by a 4.91 ratio.
The
VIX was +1.01 at 28.68. The
TRIN was +0.15 at 1.66.
Leading the Dow lower were:
Microsoft Corp.
(
MSFT |
Quote |
Chart |
News |
PowerRating), -7.02% at 51.46,
International Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating), -5.52% at 81.30, Intel
Corp.
(
INTC |
Quote |
Chart |
News |
PowerRating), -5.00% at 16.34, Hewlett Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating), -3.80%
at 19.23, McDonalds
(
MCD |
Quote |
Chart |
News |
PowerRating), -2.52% at 15.45, and JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating),
-2.20% at 26.19.
Stocks in the news:
Software giant Microsoft
Corp.
(
MSFT |
Quote |
Chart |
News |
PowerRating), -7.02% at 51.46, is under water after reporting
lower-than-expected revenue targets and a decline in unearned income. The
company reported earnings of $0.47 per share vs. a consensus of $0.46, and also
announced that it will for the first time pay dividends as it undergoes aÂ
2-for-1 stock split.
Computer hardware titan
International Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating), -5.52% at 81.30, has been
downgraded by Bear Stearns to “peer perform” from “outperform” due to valuation.
The company reported earnings $0.04 ahead of expectations with profits of $1.34
per share.
Also in the hardware sector, Sun
Micro Systems
(
SUNW |
Quote |
Chart |
News |
PowerRating), +1.35% at 3.75, reported its biggest quarterly
loss ever, though the stock showed strength after recovering from a gap down.
Conglomerate General
Electric
(
GE |
Quote |
Chart |
News |
PowerRating), -0.59% at 24.88, reported earnings in line with
expectations at $0.31 per share.
Online auctioneer eBay
(
EBAY |
Quote |
Chart |
News |
PowerRating),
+4.98% at 74.80, beat its fourth-quarter earnings expectations by $0.04 with
profits of $0.28.
In the semiconductor business,
Advanced Micro Devices
(
AMD |
Quote |
Chart |
News |
PowerRating), -16.25% at 6.03, reported a loss of $0.25
for the fourth-quarter. Cree
(
CREE |
Quote |
Chart |
News |
PowerRating), +1.52 at 18.67, has beat its
second-quarter earnings by $0.04 with profits of $0.12.Â
Home improvement retailer Home Depot
(
HD |
Quote |
Chart |
News |
PowerRating), +1.17% at 22.43, said that it expects its revenue to grow 9%-12%
for the fiscal year 2003, with per share earnings rising 9-14%. The company also
announced a $250 million store remodeling plan.
Tool maker Stanley Works
(
SWK |
Quote |
Chart |
News |
PowerRating),
-10.65%, issued an earnings warning for the fourth-quarter, citing weak sales.
Chemical company DuPont
(
DD |
Quote |
Chart |
News |
PowerRating), -0.51% at 42.16, has had its earnings estimates cut by Bank of America
to $1.95 per share, vs. previous expectations of $2.25.
In the retail sector,
Federated Department Stores
(
FD |
Quote |
Chart |
News |
PowerRating), -1.83% at 27.83, has been downgraded by
CSFB to “neutral” from “outperform.”
Oil company Marathon Oil
(
MRO |
Quote |
Chart |
News |
PowerRating),
-1.09% at 21.61, has had coverage initiated by JP Morgan at “underweight.”
Software company Veritas
Software
(
VRTS |
Quote |
Chart |
News |
PowerRating), -4.37% at 17.47, sold off after it said it will
restate its 2000 and 2001 earnings statements, and for the quarters ending
December 2000 and September 2002.
From
TM’s Implosion List, software maker THQ Incorporated
(
THQI |
Quote |
Chart |
News |
PowerRating),
-6.14% at 11.15.
danielb@tradingmarkets.com