The Zone To Watch
The major averages shot north
off the bell and continued to work higher throughout the day, making impressive
gains on the close. Biotechnology, Internet, semiconductors, insurance, and
banks were the biggest winners, with gold and silver and Japan issues the only
losing sectors.
Attempting to regain its
200-day simple moving average, the Retail HOLDRs
(
RTH |
Quote |
Chart |
News |
PowerRating), up 3.11%,
finished with a strong close just short of the mark. This sector suffered after
a weak consumer confidence report and is of much concern to analysts, as it is a
good indicator of economic health. Price action in this zone will be watched
closely, as the 200-day average is key for gauging longer trends in the market.
The
Dow Jones Industrial Average
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed up 2.25% at 9687.42. The
S&P 500
(
$SPX |
Quote |
Chart |
News |
PowerRating) closed up 2.86% at 1036.17. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed up 3.22% at
1553.29.
U.S. Treasury Bonds were
down 24 at 104 ’10.
There were no economic releases today. Tomorrow the market
will brace for reports on the consumer price index and housing starts.
Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 2.93, and up–volume
over down–volume
by a 7.52 ratio. Nasdaq advancing issues over declining issues came in at 2.03,
and up–volume
beat down–volume
by a 3.25 ratio. The
VIX
was down 2.32 at 27.61. The TRIN
was down 1.02 at 0.36.
Below-average volume had
the Dow, the S&P 500, and Nasdaq closing at the top of their daily
ranges. The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 0.17%, closed
at the top of its range. The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), up
1.77%, closed at the top of its range.
The top sectors of the
day were the GSTI Internet
Index
(
$GIN.X |
Quote |
Chart |
News |
PowerRating), up
5.88% at 81.34, and the Biotechnology Index
(
$BTK.X |
Quote |
Chart |
News |
PowerRating), up 5.80% at
375.36.
Losing
sectors of the day were the Gold and Silver Index
(
$XAU.X |
Quote |
Chart |
News |
PowerRating),
down 4.33% at 73.65, and the Japan Index
(
$JPN.X |
Quote |
Chart |
News |
PowerRating), down 2.25% at
11.60.
Communications services company Qwest Communications
(
Q |
Quote |
Chart |
News |
PowerRating), up 20.48%,
rose after the resignation of its chief executive, Joseph P. Nachio. Mr. Nachio
was asked to leave by the board of directors after frustrations over financial
and regulatory troubles.
Biotechnology firm Amgen
(
AMGN |
Quote |
Chart |
News |
PowerRating), up 6.27% at 42.70, benefited
from an upgrade by A.G. Edwards to "buy" from "hold" based
on valuation. Also in the sector, Chiron
(
CHIR |
Quote |
Chart |
News |
PowerRating), up 5.30% at 36.74,
and Immunex
(
IMNX |
Quote |
Chart |
News |
PowerRating), up 5.98% at 23.02.
Computer maker International Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating), up 1.27% at
77.14, was commented upon by Salomon Smith Barney, who has reduced its full-year
earnings estimates on the company due to weakness in IT spending, though
maintains its "buy" rating.
Paper and paper products maker Georgia Pacific
(
GP |
Quote |
Chart |
News |
PowerRating), up 4.92% at
27.07, was upgraded by CSFB to "buy" from "hold".
Fast food company McDonalds
(
MCD |
Quote |
Chart |
News |
PowerRating), up 2.40% at 29.82, announced
that they expect to beat their second quarter earnings due to strength in its
European operations.
Goldman Sachs has reduced its aluminum price forecast for 2002, as it lowered
its per share estimates on Alcoa
(
AA |
Quote |
Chart |
News |
PowerRating), up 0.66% at 31.58, and Alcan
(
AL |
Quote |
Chart |
News |
PowerRating), up .95% at 36.14.
Car retailer CarMax Group
(
KMX |
Quote |
Chart |
News |
PowerRating), up 2.64% at 23.25, was the focus
of negative comments from Barron’s, which claimed a large part of its
profits for the year ending February came from the sales of auto-loan
securities. This "front-loading" method may have increased the
company’s profits by 20%.
Construction and agricultural machinery company Caterpillar
(
CAT |
Quote |
Chart |
News |
PowerRating),
down 1.75% at 48.04, is believed by JP Morgan to have a small chance of lowering
its guidance when it announces May retail sales Tuesday. The investment banking
firm also believes there is a higher chance of the company lowering its second
half earnings. JP Morgan maintains its long-term "buy" rating.
Home improvement stocks were the focus of negative comments from Barron’s,
which claimed spending in the sector may have overextended itself. These
companies may face difficulties during the next year: Lowe’s
(
LOW |
Quote |
Chart |
News |
PowerRating),
up 2.02% at 47.79, Bed, Bath and Beyond
(
BBBY |
Quote |
Chart |
News |
PowerRating), up 0.58% at 34.39, Maytag
Corp.
(
MYG |
Quote |
Chart |
News |
PowerRating), up 2.07% at 44.20, and William’s Sonoma Inc.
(
WSM |
Quote |
Chart |
News |
PowerRating), up 1.30% at 30.23.
Conglomerate TRW
(
TRW |
Quote |
Chart |
News |
PowerRating), up 1.67% at 55.29, is reported by the Wall
Street Journal to be in talks with Goodrich
(
GR |
Quote |
Chart |
News |
PowerRating), up 3.74% at
29.39, to sell its aeronautical-systems biz. The deal may be announced within
the next few days and is reported to be worth $1.7 billion.
Tire company Goodyear Tire
(
GT |
Quote |
Chart |
News |
PowerRating), up 0.98% at 19.44, has had its
debt rating cut by Moody’s to "junk" status on the belief that the
company will continue to have a weak financial performance through 2002.
From TM’s proprietary Momentum
List, online auctioneer eBay
(
EBAY |
Quote |
Chart |
News |
PowerRating) rose 6.87% at 63.10 and
retailer Urban Outfitters
(
URBN |
Quote |
Chart |
News |
PowerRating) climbed 5.88% at 36.35.