Positive Economic News…Here’s The Market’s Reaction

July 17, 2003
Vincent Mao

Stocks are
lower this midday.
The major indices are falling for the third straight session as
weakness from the tech sector is triggering a broad-based decline. Stocks were
under pressure from the get go as the latest results from IBM
(
IBM |
Quote |
Chart |
News |
PowerRating) and
Nokia
(
NOK |
Quote |
Chart |
News |
PowerRating) weighed heavily on the markets. Dow component IBM reported an
impressive increase in second-quarter results, but a closer look revealed that
the majority of the increase came from favorable currency fluctuations. Finnish
mobile phone maker Nokia
(
NOK |
Quote |
Chart |
News |
PowerRating) reported results in line with estimates but
warned that third-quarter sales would be flat to lower than second-quarter
sales, due to increasing competition and the rising dollar.

In economic news, Weekly
Jobless Claims fell by 29,000 to a three-month low of 412,000. This was
better than economists’ expectations of 425,000. Building Permits in June
came in at 1.817 million or better than expectations of 1.790 million.
Housing Starts in June came in at 1.803 million compared to estimates of
1.750 million. Lastly, the Philly Fed Index for July came in at a reading
of 8.3 or better than estimates of 7.0.Â

The 10-year U.S. Note
is -030 at 114 210.

The dollar is +0.20 at
97.20.

Gold is +0.90 at 344.10.

Crude Oil +0.23 at
31.28.

Volume is 932,000,000 on
the NYSE, and 1,464,000,000 on the Nasdaq.

Market breadth is negative,
with NYSE declining issues over advancing issues by a ratio of 3.28, and downÂ
volume over up volume by a 4.1 ratio. Nasdaq declining issues over advancing
issues is 3.83, and down volume over up volume is 10.

Top Dow stock(s) are:

Stocks in the news:

Media giant, AOL Time Warner

(
AOL |
Quote |
Chart |
News |
PowerRating) is higher by 1.5% after Merrill Lynch upgraded the stock from
“neutral” to “buy.” Merrill based the upgrade on AOL’s improving costs structure
and its focus on advertising.Â Â

Apple Computer
(
AAPL |
Quote |
Chart |
News |
PowerRating)
is higher by 3.3% after the company unveiled third-quarter profits that topped
estimates. The company reported earnings of 5 cents a share vs. consensus
estimates of 3 cents a share. However the results were 40% off from the same
quarter a year ago. CEO Steve Jobs cited strong customer responses to new
products such the ITunes online music store and the IPOD portable music players.
The company also released its new Power Mac G5.Â

Heavy equipment maker
Caterpillar
(
CAT |
Quote |
Chart |
News |
PowerRating) is one of the few bright spots in the Dow today as the
company reported second-quarter earnings nearly double from a year ago. The
company earned $1.15 a share, up from 58 cents a share a year ago. Analysts had
expected the company to earn 66 cents a share. The Dow component attributed the
strong results to lower operating costs and favorable currency effects. Looking
ahead, the company sees full year results between $2.75 to $2.90 a share
compared to Street estimates of $2.30 a share.Â

Beverage giant Coca-Cola
(
KO |
Quote |
Chart |
News |
PowerRating) is trading higher by 3.8% after the company reported an 11% rise in
second-quarter earnings. Coke reported results including a two cent charge of 55
cents a share compared to year ago period of 49 cents a share. The company also
topped estimates by a penny.Â Â

General Motors
(
GM |
Quote |
Chart |
News |
PowerRating)
is fractionally lower after the company reported second-quarter results that
topped estimates. The auto giant reported income of $1.58 a share compared to
Street estimates of $1.19. However the results were lower than year-ago results
of $2.43. The company blamed the results on increasing pricing pressure. Â

Computer giant IBM
(
IBM |
Quote |
Chart |
News |
PowerRating)
is leading the Dow lower today after the company reported third-quarter results
in line with estimates. Late yesterday, the company reported results of 97 cents
a share compared to just 3 cents a share a year ago. Revenues jumped 10% to 21.6
billion. However most of the gains were due to favorable currency fluctuations.Â

Nokia
(
NOK |
Quote |
Chart |
News |
PowerRating) is lower
by 18.4% on very heavy volume after the cell phone maker reported second-quarter
results in line with estimates. The company reported pro forma results of 14
euro cents compared to 19 euro cents for the same period a year ago. The company
attributed the weak results to a rising dollar and increased competition from
entry-level phone sales.Â Â

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

Vincent Mao

Positive Economic News…Here’s The Market’s Reaction

BUY THE FEAR, SELL THE GREED

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