Does The Market Care About SARS?

June 11, 2003
Vincent Mao

Stocks
are mixed this midday, but off earlier lows.Â The Dow and S&P are
currently putting in a small rallies while the Nasdaq is being held back by
semiconductors. Stocks had a rough start after Texas Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating)
became the third company this week to warn that SARS is having a negative impact
on business. An SEC investigation into Freddie Mac’s accounting practices didn’t
help either. The Dow did briefly break the 9,100 level thanks to Merrill’s
positive comments on IBM
(
IBM |
Quote |
Chart |
News |
PowerRating). Bonds are higher once again on some
flight-to-quality buying. Meanwhile gold is recovering after yesterday’s $9
drop.Â

In economic news, the Federal
Reserve will release its Beige Book report at 2:00 P.M.Â

The 10-year U.S. Note
isÂ +215 at 120 105.

The dollar is +0.23 at
93.61.

Gold is -9.90 at 352.70.

Crude OilÂ -0.33 at
31.12.

Volume is at 676,000,000
on the NYSE, and at 974,000,000 on the Nasdaq

Market breadth is positive,
with NYSE advancing issues over declining issues by a ratio of 1.51, and up
volume over down volume by a 1.29 ratio. Nasdaq declining issues over advancing
issues at 1.07, and up volume over down volume is at a 1.20 ratio.

Top Dow stocks are:

Stocks in the news:

AT&T
(
T |
Quote |
Chart |
News |
PowerRating) is higher by
3.5% after the company’s chairman, David Dorman, said that he expects a dramatic
reduction in company debt. Dorman told investors at AT & T’s annual meeting that
he expects the company to have below $10 billion in debt vs. $12 billion at the
end of its first quarter. Dorman also noted that the company would “set the
standard” in customer service.Â

Eli Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating) is
higher by 3.75% after the company said that it expects second-quarter results to
come in at the high end of estimates. The company is expecting results to come
in between 59 to 61 cents a shares. Lilly also reaffirmed full-year results ofÂ
$2.50 to $2.60 a share of fiscal 2003.Â

Guitar Center
(
GTRC |
Quote |
Chart |
News |
PowerRating)
is higher by 7% on very heavy volume. The musical instrument retailer announced
that it would sell $90 million in 4% convertible notes due 2013. The notes would
convert to common shares at $34.58 a share. The company plans to use the
proceeds to pay down debt and redeem its higher-yielding 11% senior notes.Â Â

Freddie Mac
(
FRE |
Quote |
Chart |
News |
PowerRating) is
lower by 1.6% on more than double its average volume. Two days after the shake
up of its top management, the District of Virginia is starting a criminal
investigation into the company.Â

Semiconductor equipment
manufacturer Cymer
(
CYMI |
Quote |
Chart |
News |
PowerRating) is off by 5%, but off earlier lows. The
company warned that second-quarter estimates would fall short of expectations
due to weak demand. The company now expects revenues for the second quarter to
come in between $58 and $61 million compared to previous forecast of $67.3
million. Cymer also expects profit margins to be 13% to 17% compared to prior
forecast of 17% to 22%.Â

Texas Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating)
is lower by 9.5% on triple its average volume. The chipmaker cut its
second-quarter targets and announced job cuts due to weakness attributed to SARS.
The company now sees results of 6 cents a share compared to previous estimates
of 8 cents a share. Texas also will cut 250 jobs from its Japanese operations.
The company is the third this week to warn due to SARS.Â

vincentm@tradingmarkets.com

Does The Market Care About SARS?

BUY THE FEAR, SELL THE GREED

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