Can 71% Of Managers Be Wrong?

• June 17, 2003
• Vincent Mao

Stocks
are mixed this midday. Benign economic data is supporting the market,
but the major indices have fluctuated above and below the flat line for much of
the session. After a 200-point rise in the markets yesterday, the major indices
are having a tough time making further headway. The indices are currently mixed,
with both the Dow
(
$INDU.X |
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Nasdaq
(
$COMPQ |
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Dow briefly is now in 9,300 territory, thanks to Lehman Brothers’ positive
comments on Microsoft
(
MSFT |
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PowerRating). Merrill
Lynch released a survey of 270 asset managers which showed cash levels at a
two-year low and also 71% managers view the stock market as overvalued. Consumer
prices in May rose unexpectedly and eased the market’s worries about deflation.
Meanwhile the housing markets continued to remain red hot. Bonds are trading
lower for the second day, thanks to the economic data. 

The Dow Jones Industrial
Average
(
$INDU.X |
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$SPX.X |
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is +0.03% at 1011.13. The Nasdaq
(
$COMPQ |
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PowerRating) is +-0.01% at 1666.19.

The day’s leading sectors are
Gold & Silver
(
$XAU.X |
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(
$DRG.X |
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+1.91%, Health Care
(
$HCX.X |
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PowerRating), +1.76%, Internets
(
$DOT.X |
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PowerRating),
+1.58% and Airlines 
(
$XAL.X |
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PowerRating), +0.88%.

Weak today are Biotechs
(
$BTK.X |
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PowerRating), -1.17%, Oil
(
$XOI.X |
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PowerRating), -1.11%, Computer
Hardware
(
$HWI.X |
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PowerRating), -0.92%, Housing
(
$HGX.X |
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PowerRating), -0.84%,
and Energy
(
$DXE.X |
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PowerRating), -0.79%.

In economic news, the May
CPI came in flat vs. an expected -0.1% decline. The May Core CPI,
which strips out the volatile food and energy components, rose by 0.3% vs. an
expected rise of 0.1%. This was the biggest monthly gain since last August, and
will likely alleviate the market’s deflation fears. Industrial production in
May rose by 0.1% vs. an expected flat reading. Capacity utilization in
May came in at 74.3% compared to an expected 74.4%. May housing starts rose
by 6.1% to a rate of 1.732 million units and building permits rose 3.7% to a
1.788 million rate. 

The 10-year U.S. Note
is  -160 at 119 055.

The dollar is +0.16 at
92.96.

Gold is +4.90 at 364.50.

Crude Oil -0.17 at
29.40.

Volume is at 730,000,000
on the NYSE, and at 1,004,000,000 on the Nasdaq.

Market breadth is mixed,
with NYSE advancing issues over declining issues by a ratio of 1.31, and up
volume over down volume by a 1.13 ratio. Nasdaq declining issues over advancing
issues at 1.07, and down volume over up volume is at a 1.37 ratio.

Top Dow stocks are:

General Motors
(
GM |
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PowerRating), +2.72% at
38.12, Merck
(
MRK |
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PowerRating) +2.63% at 62.40, Microsoft
(
MSFT |
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PowerRating),
+2.31% at 25.99, Johnson & Johnson
(
JNJ |
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PowerRating) +2.25% at 54.91 and Walt
Disney
(
DIS |
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PowerRating) +1.59% at 21. 

Stocks in the news:

Altria Group
(
MO |
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is fractionally lower after CSFB raised their target price from $45 to $50. CSFB
cited that declining litigation in the tobacco industry, improving fundamentals,
and the weak dollar should benefit the company. 

Ballard Power Systems
(
BLDP |
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PowerRating)
is higher by 4.0% on heavy volume. The company announced a $1.75 million order
from an unnamed major automotive corporation. 

Circuit City
(
CC |
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PowerRating) is
higher by 5% on heavy volume after reporting better-than-expected first-quarter
results. The electronics retailer reported a loss of 21 cents a share, beating
estimates by 3 cents. Circuit City blamed the results on the general economic
weakness and rapid technological improvements. 

J.M. Smuckers
(
SJM |
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PowerRating)
is higher by 5.8% on double its average volume after reporting
better-than-expected fourth-quarter results. The company reported results of 46
cents a share compared to 28 cents a share for the same period a year ago.
Excluding charges, Smuckers earned 51 cents a share besting estimates by 4
cents. 

Drug maker Pfizer
(
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PowerRating)
is higher by 3.5% on more heavy volume. The company cuts its fiscal 2003 results
to $1.73 from $1.80 due to excess inventory from the Pharmacia acquisition.
However the firm affirmed its fiscal 2004 estimates of $2.13 a share or 7 cents
higher than Street estimates.  

AT&T
(
T |
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PowerRating) is off by 4%
after Merrill Lynch downgraded Ma Bell from “neutral” to “sell”. Merrill based
the downgrade on competition from its consumer business and delays in recovery
from its enterprise business.  

CNET Networks
(
CNET |
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PowerRating)
is lower by 5.5% on heavy volume after the company announced a $100 million
convertible note offering. Proceeds from the notes, which will mature in 2013,
will be used for acquisitions, expansion, and general corporate purposes. 

Vincent Mao