Here’s What Spooked The Market

August 1, 2003
Vincent Mao

Stocks are
modestly lower this midday, following a mixed bag of economic reports.Â Stocks
are off the lows of the session but are near the lows set this week. The
nation’s unemployment rate came in lower than expected, nonetheless the job
market still showed signs of a struggle. Nonfarm payrolls revealed that the
economy shed jobs for the sixth straight month.

In a sign that the
manufacturing sector is expanding, the ISM index came in above 50 for the first
time in five months. As we roll into the new month, the Stock Trader’s Almanac
cites that August has been the worst month for the Dow and S&P over the last 15
years. Meanwhile August is the third-worst month for the Nasdaq. Bonds are
recovering after an early morning sell off. Both the dollar and gold are lower
today.Â Â

In economic news today,
Nonfarm Payrolls in July came in at -44,000 vs. an expected rise of 13,000.
This was the sixth consecutive month month of job losses. June Nonfarm
Payrolls were revised to -72,000 from the initial estimate of 30,000. The
Unemployment Rate in July fell to 6.2% from June’s 6.4%. Economists had
predicted a drop to 6.3%. Following yesterday’s better-than-expected Chicago PMI,
the ISM Manufacturing Index in July came in at 51.8 compared to June’s
reading of 49.8. This was the highest reading since January. However, the number
was below expectations of a reading of 52. The revised University of
Michigan’s Consumer Sentiment for July came in at 90.9 compared to June’s
89.7. This was better than economists’ estimates of 90.5. The Average
Workweek in July was 33.6 vs. estimates of 33.8. Hourly Earnings in July
rose by 0.3% vs. estimates or a rise of 0.2%. Personal Income in June
rose by an expected 0.3% and Personal Spending rose by 0.3% vs. an
expected rise of 0.4%.Â

The 10-year U.S. Note
is -090 at 110 110.

The dollar is -0.29 at
96.85.

Gold is -3.80 at 352.

Crude Oil +1.15 at
31.69.

Volume is 764,000,000 on
the NYSE, and 862,000,000 on the Nasdaq.

Market breadth is negative,
with NYSE declining issues over advancing issues by 2.44, and down volume over
up volume by 2.59. Nasdaq declining issues over advancing issues at 2.22, and
down volume over up volume at 1.45.

Top Dow stocks are:

Stocks in the news:

Computer power management
equipment maker American Power Conversion
(
APCC |
Quote |
Chart |
News |
PowerRating) is lower by 4%
after its latest quarterly earnings. For its second quarter, the company earned
17 cents a share compared to 15 cents a share for the year-ago period. The
results were in line with estimates. Looking ahead, CEO Rodger Dowdell said that
its third quarter “continues to exhibit positive year-over-year and sequential
revenue growth rate trends.”

Specialty drugmaker maker
Biopure
(
BPUR |
Quote |
Chart |
News |
PowerRating) is trading higher by more than 27% after the FDA
requested more information on its Hemopure treatment. Hemopure is used to treat
adult patients during orthopedic surgery. The FDA’s request does not include
more trials, but more focuses on clarification of clinical and preclinical
data.Â

Energy giant ChevronTexaco

(
CVX |
Quote |
Chart |
News |
PowerRating) is lower by 1% after the company reported second-quarter results
slightly below analysts’ estimates. The company reported income of $1.50 a share
compared to just 39 cents in its year-ago quarter. However the results were 2
cent shy of consensus estimates.Â

Insurance and financial
services company Cigna
(
CI |
Quote |
Chart |
News |
PowerRating) is lower by 3.2% after the company
reported a loss in its latest quarter. For its second quarter, the company
reported a loss of 38 cents a share compared earnings of $1.50 a share during
the year-ago quarter. The loss was attributed to a $286 million charge for
discontinued operations. Excluding the charge, the company earned $1.13 a share
or 5 cents better than consensus estimates. Looking ahead, the company sees
full-year results between $5 to $5.25 a share compared to analysts’ estimates of
$4.92 a share.Â

Computer giant International
Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating) is off by 1% after an unfavorable court ruling.
An Illinois court judge found that IBM violated age-discrimination laws as its
pension plans make older employees accrue benefits at a slower rate than younger
employees. IBM plans to appeal the decision.Â Â

Dow component Johnson &
Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating) is lower by 2.5% after receiving a downgrade from Merrill
Lynch. Merrill cut the stock’s rating from “buy” to “neutral” amid a couple of
issues. First, sales of J&J’s top selling anemia drug, Procrit, are slowing due
to competition form Amgen. Second, the launch of Cypher has been disappointing
due to short supplies. Cypher will also likely face competition from a similar
product from Boston Scientific later this year.Â Â

If you have any comments or
questions, please feel free to email me.

Vincent Mao

vincentm@tradingmarkets.com

Here’s What Spooked The Market

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