Can The Markets Shrug Off IBM?

June 3, 2003
Vincent Mao

Stocks
are slightly higher this midday. The major indices are somewhat
higher today after the averages fluctuated between red and green earlier in the
session. Neutral to positive comments from Chairman Greenspan helped to offset
the effects of possible accounting woes at IBM
(
IBM |
Quote |
Chart |
News |
PowerRating). The Chairman commented
that “Recent economic statistics and the stock market’s turnaround indicate the
economy has stabilized, but acceleration has not began.” The Chairman also
stated that he sees deflation as a low-probability event. Bonds are up big today
after a three-day pullback. The dollar is also firmer. After a couple of
attempts at pushing and staying above the psychological 9,000 level, the indices
reversed after the spread of a SARS rumor yesterday. Will Big Blue continue to
be a drag on the market or can the Dow reclaim that critical level?

No economic reports today.Â

The 10-year U.S. Note
isÂ 315 at 119 180

The dollar is +0.24 at
93.70

Gold is -0.70 at 366.40

Crude oilÂ +0.07 at 30.78

Volume is heavy at
852,000,000 on the NYSE, and at 1,277,000,000 on the Nasdaq.

Market breadth is very
positive, with NYSE declining issues over advancing issues by a ratio of
1.14, and down volume over up volume by a 1.70 ratio. Nasdaq declining issues
over advancing issues at 1.23, and up volume over down volume is at a 1.65
ratio.

Top Dow stocks are:

Stocks in the news:

Brocade Communications
(
BRCD |
Quote |
Chart |
News |
PowerRating)
is higher by 12% on double its average volume. The shares jumped after Merrill
Lynch upgraded the company to “buy” from “neutral”. Merrill also upped its
revenue and earnings estimates for fiscal 2003 and 2004.Â

Dow component Honeywell
(
HON |
Quote |
Chart |
News |
PowerRating) is trading higher by over 2% on after Prudential upgraded the stock to
“buy” from “hold”. Although Prudential does not see a fundamental improvement in
the sector, they based the upgrade on Honeywell’s strong margins in its fire,
security, and systems businesses.

Wireless Communications giant
Qualcomm
(
QCOM |
Quote |
Chart |
News |
PowerRating) is higher by 2.6% on heavy volume. The company
announced that as part of a $500 million R&D plan, it plans to invest up to $100
million in Chinese companies involved in developing the CDMA technology.Â

FedEx
(
FDX |
Quote |
Chart |
News |
PowerRating) is lower
by 1.67% but off earlier lows. In an effort to cut costs, the company announced
that it will cut 12% of its workforce or 14,000 jobs.Â

IBM
(
IBM |
Quote |
Chart |
News |
PowerRating) is lower
by 3.5% on heavy volume. Late yesterday, Big Blue announced that the SEC is
investigating the company’s accounting practices in recognizing revenues in
fiscal 2000 and 2001.Â

Martha Stewart Living
Omnimedia
(
MSO |
Quote |
Chart |
News |
PowerRating) is lower by 15%. The company reported that the “Diva of
Domesticity,” Martha Stewart is the target of a criminal investigation and will
be “indicted in the future.”

vincentm@tradingmarkets.com

Can The Markets Shrug Off IBM?

BUY THE FEAR, SELL THE GREED

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