Rally! Here’s Why

July 31, 2003
Vincent Mao

Stocks are
sharply higher this midday following a trio of positive economic reports.Â After
several sessions of subdued activity, the major indices are all solidly in the
green after key economic reports suggested that the economy is headed in the
right direction. Second-quarter GDP grew at a faster-than-expected pace. The
lagging job market is again showing signs of life as initial jobless claims fell
for the second straight week. And a regional manufacturing index came in better
than expected and also rose to a six-month high. Every sector with the exception
of healthcare is green today. Semiconductors are leading the pack after Merrill
Lynch had some positive comments on the sector. Merrill said “the underpinning
now exits for a much more sustained fundamentally based upward move in stock
prices.” The Dow surpassed its June 17 high and now stands at a 52-week high.
However both the broader S&P and Nasdaq Composite indices are still below their
June 17 highs. Bonds are taking it on the chin today after the positive economic
data.Â

In economic news today, GDP
for the second quarter grew at a 2.4% annual rate versus an expected 1.5%
rate. The majority of the gains could be attributed to a 44% jump on defense as
we went to war with Iraq. Weekly jobless claims for the week ended 7/26
fell by 3,000 to 388,000. Economists had expected claims to come in at 400K.
Lastly, the National Association of Purchasing Managers Index came in at
55.9 versus expectations of 53.8. This was up from June’s 52.5.Â

The 10-year U.S. Note
is -101 at 110 290.

The dollar is +0.84 at
97.14..

Gold is -.60 at 357.50.

Crude Oil +0.16 at
30.84.

Volume is 824,000,000 on
the NYSE, and 1,000,000,000 on the Nasdaq.

Market breadth is positive,
with NYSE advancing issues over declining issues by a 1.38, and up volume over
down volume by 3.06. Nasdaq advancing issues over declining issues at 1.64, and
up volume over down volume at 4.10.

Top Dow stocks are:

Stocks in the news:

Health benefits provider
Anthem
(
ADRX |
Quote |
Chart |
News |
PowerRating) are lower by 4.4% despite reporting better-than-expected
second-quarter results. In its latest quarter, the company reported earnings
excluding items $1.30 a share compared to 99 cents in the year-ago period. This
was six cents better than analysts’ estimates. The company also raised full-year
guidance to $5.10 to $5.15 from its previous range of $5 to $5.05.Â

Laboratory equipment maker
Beckman Coulter
(
BEC |
Quote |
Chart |
News |
PowerRating) is trading higher by 1% after posting a 28%
increase in quarterly earnings. For the second quarter, the company earned 82
cents a share compared to 64 cents in the year ago quarter. This was 5 cents
better than consensus estimates. Beckman Coulter also raised its quarterly
dividend by 2 cents to 11 cents a share. Looking ahead, the company sees third
quarter results between 59 to 64 cents a share or within consensus estimates of
62 cents a share.Â

Chubb
(
CB |
Quote |
Chart |
News |
PowerRating) is higher
by 4.3% after the insurance holding company reported better-than-expected
quarterly results and raised full-year guidance. For the second quarter, the
company earned $1.45 a share compared to $1.20 a share in the year-ago period.
Analysts had predicted earnings of $1.02. Looking ahead, the company raised
full-year guidance to between $4.90 to $5.30 a share up from its previous range
of $4.60 to $5.00. J.P. Morgan also upgraded the stock from “underweight” to
“neutral”.

Halliburton
(
HAL |
Quote |
Chart |
News |
PowerRating) is
higher by 4.7% after the company reported second-quarter income of 6 cents a
share compared to a loss of $1.15 in the year ago period. Analysts had expected
2 cents a share. Looking ahead, the company sees Q3 earnings of 32 cents a share
or a penny better than current estimates.Â

Drug maker Kos
Pharmaceuticals
(
KOSP |
Quote |
Chart |
News |
PowerRating) is higher by 27% after reporting
better-than-expected earnings and lifted its full year forecast. For the second
quarter, the company earned 31 cents a share, compared to a loss of 50 cents a
share in the year ago quarter. The company also raised its full-year guidance
from 65 to 75 cents a share to $1.20 to $1.30 a share due to anticipated strong
sales of its Advicor and Niaspan drugs. Â

Newell Rubbermaid
(
NWL |
Quote |
Chart |
News |
PowerRating)
is lower by 10% after the company lowered guidance for Q3 and full-year
estimates. For the second quarter, the company reported earnings excluding items
of 42 cents a share compared to 39 cents a share in the year-ago period. The
results were in line with estimates. Looking ahead, the company sees Q3 results
of 40 to 44 cents a share compared to current estimates of 52 cents a share. For
full year the company sees results of $1.60 to $1.68 compared to current
estimates of $1.72.

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

Vincent Mao

vincentm@tradingmarkets.com

Rally! Here’s Why

BUY THE FEAR, SELL THE GREED

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