The Impact Of Fresh Data

March 26, 2002
Daniel Beighley

The markets were off to a
positive start this morning, then trended sideways for the middle of the day,
before fizzling out in the last two hours, managing to hold slight gains for the
day. Airline and semiconductor stocks led the pack, with gold and silver, and
Internet stocks holding up the rear.

As downgrades continued to
enter the market mindset, fresh economic data once again pointed the way to a
strong recovery. Consumer confidence for March bolted to 110.2, bettering
February’s number of 95, and the widely expected reading of 97.8. The number was
endorsed with the expectations index rising to 109.3 vs. the expected 94,
and the present situation index coming in at 111.5 vs. the expected 96.4,
for the biggest jump in 25 years. Also, February durable goods rose 1.5%,
better than the 1.1% gain expected. Excluding transportation orders,
durables fell 1.3%, and excluding defense orders, durables fell 0.2%,
both for the first decline in five monthsÂ

Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 1.47, and up-volume
over down-volume by a 1.32 ratio. Nasdaq advancing issues over declining issues
came in at 1.27, and up-volume beat down-volume by a 1.11 ratio. The
VIX
was down 0.73 at 19.75. The TRIN
was down 0.67 at 1.10.

Below average volume moved the
Dow and Nasdaq to test their 20-day MAs, then closed below; and the S&P 500
to test its 20- and 200-day MAs, then closed below as well. The Semiconductor
Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 2.82%, tested its 20-day MA, then closed below.
The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 2.49%, also tested its
20-day MA, and it, too, closed below.

Software company Liberate Technologies (LBRT),
up 0.79 at 6.31, reported a loss of 5 cents a share for the third
quarter. Analysts were looking for a loss of 7 cents a share under the premise
that the company does not abide by generally accepted accounting principles.

Chip maker Applied Materials (AMAT),
up 2.08% at 52.35, was downgraded by Gerard
Klauer Mattison
to Neutral from Buy under the assumption that an increase in capital spending
orders is already factored into the current stock price.

Car oil distributor Pennzoil-Quaker
State (PZL),
up 38.79% at 21.50, announced that it will be bought by Royal Dutch/Shell
Group in a deal worth $2.9 billion in cash and assumed debt.

Software company Networks Associates
(
NET |
Quote |
Chart |
News |
PowerRating), down 11.08% at 22.23,
reported that the Securities and Exchange Commission had begun a “formal
order of private investigation” into the company’s formal 200 accounting
practices, though maintained that it had done nothing illegal. Meanwhile, JP
Morgan downgraded the company to Market Perform from Buy.Â Â Â Â

Global communications company WorldCom Inc (WCOM),
down 6.28% at 6.11, is the biggest loser in the Nasdaq 100 pre-market. The
company was downgraded by UBS Warburg to Hold from Buy over growth concerns.

Electric utilities company Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating), down 10.96% at 12.18,
had its credit rating reduced to junk status by Standard and Poor’s. The
company’s pledge to give $2 billion to three groups of secured bondholders
inspired the downgrade.

Air carrier US Airways Group
(
U |
Quote |
Chart |
News |
PowerRating), up 2.18% at 6.54, announced that
it may ask employees to take a pay cut to help put it back on its feet
financially.

Internet communications equipment provider Ciena
(
CIEN |
Quote |
Chart |
News |
PowerRating), up 0.59%
at 8.40, said that it will reduce 22% of its workforce in a move to return to
profitability. The company also announced that it will take a restructuring
charge and an inventory charge for the second quarter.Â

Software company MRO Software
(
MROI |
Quote |
Chart |
News |
PowerRating), down 43.43% at 11.98,
warned that it will post a second quarter loss instead of a profit due to
reduced corporate spending on information technology.

The Impact Of Fresh Data

BUY THE FEAR, SELL THE GREED

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