The Latest Reason To Fear

February 12, 2003
Daniel Beighley

It was
another round of selling for the markets, as geopolitical tension was
taken up a notch with news that N. Korea may possess the capability to hit the
Western U.S. with a missile. Sellers’ motives were also spurred on by lowered
estimates from major auto makers and a key semiconductor stock. The potential to
re-test the October lows is now pressing on market players. Looking strong going
into tomorrow’s key retail data is the retail sector, as it was one of two
sectors closing in the green.

There were no economic releases
for the day.

The Ten Year Note
(
TYH3 |
Quote |
Chart |
News |
PowerRating) was +135 at 114 260.

The U.S. Dollar
(
DXH3 |
Quote |
Chart |
News |
PowerRating) was +0.11 at 100.73.

Volume was slightly
below average, with the NYSE coming in at 1,220,586,000
and the Nasdaq at 1,189,501,000.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 2.20, and down
volume over up volume by a 4.21 ratio. Nasdaq declining issues over advancing
issues came in at 2.02, and down volume beat up volume by a 4.70 ratio.

The

VIX was +1.75 at 37.35. The

TRIN was +0.10 at 1.67.

Leading the Dow lower were:

Stocks in the news:

In the chip sector, Applied
Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating), -1.00% at 11.82, cut its second-quarter earnings
estimates to $1.0-0.02 per share vs. previous estimates of $0.03 per share.
Merrill Lynch has also cut its full year estimates on the company.

In the auto sector, General
Motors
(
GM |
Quote |
Chart |
News |
PowerRating), -5.63% at 34.02, was downgraded by Bank of America to “sell”
from “neutral” with the belief that the company will will cut its dividend in
the near-term.Â The firm also lowered its estimates on Ford Motor
(
F |
Quote |
Chart |
News |
PowerRating),
-1.12% at 8.75, with a new price target of $11 vs. the previous target of $13.

Insurance company Prudential
(
PRU |
Quote |
Chart |
News |
PowerRating),
-3.01% at 29.00, posted earnings $0.02 worse than expected with profits of $0.43
per share, though guided within line for the full year 2003.

In the utility sector, El Paso
(
EP |
Quote |
Chart |
News |
PowerRating),
-22.66% at 3.65, sold off after it announced incremental cash demand from recent
credit downgrades will be around $200 million.

Entertainment conglomerate
Viacom
(
VIA |
Quote |
Chart |
News |
PowerRating), -2.61% at 36.55, dropped after the company announced
profits short of expectations, and that the president, Mel Karmazin, will soon
be selling $10 million worth of the company stock.

Beverage giant Coca-Cola
(
KO |
Quote |
Chart |
News |
PowerRating), +1.89% at 39.74, announced earnings in-line with estimates, though said
it will take a $400 million charge from lay-offs.

Computer services company
PEC Solutions
(
PECS |
Quote |
Chart |
News |
PowerRating), -35.83% at 18.48, beat its fourth-quarter
earnings expectations by $0.01, though guiding lower for the first-quarter. The
company expects first-quarter earnings to be $0.17-0.18 per share vs. previous
expectations of $0.20 per share.

Global positioning system maker
Garmin Ltd.
(
GRMN |
Quote |
Chart |
News |
PowerRating), +5.06% at 30.26, beat its fourth-quarter
earnings by $0.07 with profits of $0.42. per share. The stock is a member of
TM’s

Momentum List.

Communications services company
Alltel
(
AT |
Quote |
Chart |
News |
PowerRating), -0.61% at 43.60, was upgraded by UBS Warburg to “buy”
from “neutral”.

Oil and gas company BP
(
BP |
Quote |
Chart |
News |
PowerRating),
-1.04% at 37.70, is the subject of a Wall Street Journal article which cites
investors who believe the company possesses good valuation amidst recent
developments.

Electric utilities company
DTE Energy
(
DTE |
Quote |
Chart |
News |
PowerRating), -1.60% at 39.87, missed its fourth-quarter earnings
estimates by $0.05 with profits of $1.21 per share.

Grocery retailer Safeway
(
SWY |
Quote |
Chart |
News |
PowerRating), -0.04% at 20.03, had coverage initiated by Deutsche Securities at
“hold”.

Household product maker
Clorox
(
CLX |
Quote |
Chart |
News |
PowerRating), +1.46% at 41.00, was upgraded by Bank of America to “buy”
from “neutral”.

danielb@tradingmarkets.com

The Latest Reason To Fear

BUY THE FEAR, SELL THE GREED

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