Banks And Brokers Bleed
Despite some extremely inflation-friendly PPI numbers, stocks fell apart
Thursday in a broad-based decline triggered by an earnings warning from Chase
Manhattan Bank. Broker/dealers fell in sympathy with Chase, and technology
stocks again exhibited their signature gap-up and slow, day-long fade to red.
The only positive was the fact that volume declined by about 13% on both the
Nasdaq and NYSE, as Nasdaq volume posted 1.73 billion shares and NYSE volume
totaled 1.04 billion shares.
November’s PPI increased just 0.1%, which was less than the 0.2% increase analysts expected. The core PPI was flat, which was less than the expected 0.1%
increase.
The talk among market analysts centered on the drying up of buyers as more
and more participants remain sidelined. Reports show that cash levels among
stock funds have moved above 6%, which are the highest levels since November
1998.
“The pre-announcements in some banks today has taken the bank index down
about 4%. You also have tech still under some pressure after a nice run. It
feels to me like the market wants to continue to consolidate before it tries to
go higher, and I wouldn’t be surprised if it trips lower over the next day or
two,” said Brian Conroy, Head of Listed Trading, J.P. Morgan.
It’s healthy that we do this after the nice up move we had. Going forward,
there will probably be some more optimism because of the Presidential situation
getting some clarity. You’re kind of waiting through the middle of
pre-announcement season, and very soon people will begin to get confidence that
the worst might be over,” he added.
According to preliminary numbers, the Dow fell 119.45 to 10,674.99, the
Nasdaq slid 94.24 to 2728.53, and the S&P 500 lost 19.06 to 1340.93.
Top sectors were chemicals
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$CEX.X |
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PowerRating), up 0.7%, consumer stocks
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up 0.5%, and gold and silver
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Weaker groups were Internets
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$GIN.X |
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PowerRating), down 4.1%, transports
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PowerRating),
down 4.1%, and broker/dealers
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PowerRating), down 4.7%.
America Online
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PowerRating) rose 1.50 to 50.00 after the FTC at last approved
its merger with media giant Time Warner. The celebration was subdued, however,
since the AOL share is 48 points below last year’s high.
Among some of the better-performing standouts were in the drug and genomic
arenas. Solid days were had by Visible Genetics
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PowerRating), up 13%, ICN
Pharmaceuticals
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PowerRating),
up 9%.
Looking ahead, the November Consumer Price Index numbers will be released
Friday at 8:30 AM ET. Analysts expect a 0.2% increase in both the CPI and the
CPI core rate.