Sectors That Defy The Market

March 13, 2002
Daniel Beighley

Stocks headed south off the
bell, and with the exception of a couple small rallies, stayed in that direction
to bring the indexes to negative closes. Healthcare, biotechnology and
pharmaceuticals represented the only positive closes for sectors, with
networking, semiconductors and airline stocks deep in the red.

Downgrades in the semiconductor
sector, coupled with a disappointing economic report, set the day’s tone in the
pre-market. The Commerce Department reported that February Retail sales
showed a 0.3% rise, compared to the 0.7% to 1% expected by economists. Auto
sales were a bright spot in the report, with sales rising 0.4% for its first
gain in four months. The ex-autos number showed a 0.2% rise in retail sales.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.52, and down-volume
over up-volume by a 2.36 ratio. Nasdaq declining issues over advancing issues
came in at 1.37, and down-volume beat up-volume by a 3.94 ratio. The
VIX
was up 0.72 to 22.03. The TRIN
was up 0.45 to 1.55.

Slightly above average volume
on the NYSE, and slightly below average volume on the Nasdaq accompanied the Dow
to the middle of its recent consolidation range, the S&P 500 to just shy of
its 200-day MA, and the Nasdaq further below its 50- and 200-day MAs. The Semiconductor
Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 3.95%, put in its third negative day in a row,
as it moved back into its base. The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating),
down 1.10%, took another step towards its 50-day MA.

Downgrades from
Morgan Stanley in the semiconductor sector put a negative spin on things,
as KLA–Tencor (KLAC),
down 4.24% to 63.31, Novellus
(NVLS), down
3.78% to 49.85, Lam Research (LRCX),
down 2.18%
to 26.95, Axcelis (ACLS),
down 5.35% to 12.92, LTX Corp (LTXX),
down 4.69% to 24.97, Teradyne (TER),
down 4.35% to 35.85, and Varian Semi (VSEA),
down 3.42% to 40.93, were all downgraded to Outperform from
Strong Buys. Though these were downgraded, Morgan Stanley has also raised their
price targets on these companies. Go figure.

Also in the semiconductor sector, JP Morgan downgraded Intel
(
INTC |
Quote |
Chart |
News |
PowerRating), down 5.12% to 31.30, with the belief that the company will slash
prices by 50% to combat continued pricing pressures. Intel was the biggest loser
in the Dow Industrials. Advanced Micro Devices
(
AMD |
Quote |
Chart |
News |
PowerRating), down 9.21% to
14.30, was also downgraded with the fears that Intel’s price cuts will cut into
its market share.

Despite an upgrade from Merrill Lynch, Micron Technology
(
MU |
Quote |
Chart |
News |
PowerRating), down
4.62 to 34.04, also fell with the rest of the sector.

Drug maker IDEC Pharmaceuticals Corporation
(IDPH),
up 4.70% at 69.50, benefited from a Food and Drug Administration rejection of
potential rival Bexxar.

Communications company Comverse Technology Inc.
(CMVT),
down 19.87% to 12.70, fell after posting a loss for the quarter and has lowered
its estimates for next quarter.

Electric utilities company Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating), down 4.37% to 11.17,
announced that it will receive $2 billion worth of debt financing under the
condition that it puts up $4 billion in assets. Prior to this deal, the company
was seeking $1 billion in debt relief without any collateral.

Grocery chain Albertson’s
(
ABS |
Quote |
Chart |
News |
PowerRating), up 0.92% to 31.69, reported that
their fiscal fourth quarter earnings rose 32%, benefiting from the sale of 80
Osco drug stores and an adjustment to its long-term disability plan and other
one-time benefits. The company also announced that it will close its stores in
four underperforming markets.

Sectors That Defy The Market

BUY THE FEAR, SELL THE GREED

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