This Is A Good Sign

The major indexes ended the day
in positive territory in a show of optimism ahead of President Bush’s state of
the union address. Price action chopped its way lower in the first half of the
session, then staged an afternoon rally, though retreated into the close.
Earnings season continued without any major standouts, as talk of geopolitical
affairs once again dominated headlines. The daily bars on the Dow and S&P 500
have formed bullish Kings & Queens patterns, which could potentially put a halt
to the recent decline.

The Dow Jones Industrial
Average

(
$INDU.X |
Quote |
Chart |
News |
PowerRating)
closed +1.24% at 8,089.05. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
closed +1.30% at 858.55. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)

closed +1.28% at 1,342.31.

The biggest winners of the day
were computer hardware
(
$GHA.X |
Quote |
Chart |
News |
PowerRating)
, +3.45%,
utilities
 
(
$UTIL.X |
Quote |
Chart |
News |
PowerRating)
, +2.96%,
networking
(
$NWX.X |
Quote |
Chart |
News |
PowerRating)
, +2.77%, and broker/dealers
(
$XBD.X |
Quote |
Chart |
News |
PowerRating)
, +2.47%.

The day’s losers were
telecoms

(
$XTC.X |
Quote |
Chart |
News |
PowerRating)
, -0.32%, and gold and silver
(
$XAU.X |
Quote |
Chart |
News |
PowerRating)
, -0.17%.

In economic news, durable
goods orders
came in at 0.2% vs. expectations of 0.1%, consumer
confidence
came in at 79.0 vs. expectations of 78.5, and new home sales
came in at 1082K vs. expectations of 1040K.

The Ten Year Note
(
TYH3 |
Quote |
Chart |
News |
PowerRating)
was -045 at 114 050.

The US Dollar
(
DXH3 |
Quote |
Chart |
News |
PowerRating)
was +0.20 at 99.74.

Volume was slightly
below average
, with the NYSE coming in at 1,421,103,000

and the Nasdaq at 1,411,801,000.

Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 1.77, and up
volume over down volume by a 2.87 ratio. Nasdaq advancing issues over declining
issues came in at 1.67, and up volume beat down volume by a 3.53 ratio.

The

VIX
was +4.03 at 35.74. The

TRIN
was -1.74 at 0.61.

Top Dow gainers were:

Merck Co.
(
MRK |
Quote |
Chart |
News |
PowerRating)
, +5.10% at 54.40, American
Express

(
AXP |
Quote |
Chart |
News |
PowerRating)
, +4.78% at 35.02, Honeywell
(
HON |
Quote |
Chart |
News |
PowerRating)
, +4.77% at
23.47, Boeing Co.
(
BA |
Quote |
Chart |
News |
PowerRating)
, +2.71% at 31.45, Exxon Mobile
(
XOM |
Quote |
Chart |
News |
PowerRating)
,
+2.63% at 32.66, and Proctor & Gamble
(
PG |
Quote |
Chart |
News |
PowerRating)
, +2.34% at 85.00.

Stocks in the news:

Office equipment company Xerox Corp.
(
XRX |
Quote |
Chart |
News |
PowerRating)
, +17.39% at 9.45, reported earnings of $0.24 per share, as its
equipment sales showed signs of stabilizing. The company is upbeat for the year
and quarter.

Publisher McGraw-Hill
(
MHP |
Quote |
Chart |
News |
PowerRating)
, +5.57% at
58.31, beat its fourth-quarter earnings expectations by $0.02 with profits of 
$0.69 per share. The company was also upgraded by Merrill Lynch to “buy” from
“neutral.”

Shipping company United Parcel Service
(
UPS |
Quote |
Chart |
News |
PowerRating)
, +0.92% at 61.03, beat its fourth-quarter earnings expectations by
$0.02 with profits of $0.59 per share. The company said it is looking to Asia
and Europe to boost growth for 2003.

Chemical giant Du Pont
(
DD |
Quote |
Chart |
News |
PowerRating)
, +0.70% at
38.73, beat its fourth-quarter earnings expectations by $0.03 with profits of
$0.34 per share. The company’s net income rose 91% after the sale of its
pharmaceutical business.

Drug maker Wyeth
(
WYE |
Quote |
Chart |
News |
PowerRating)
, +10.88% at
37.70, beat its fourth-quarter earnings expectations by $0.01 with profits of
$0.65 per share. The company is upbeat for 2003. Also, Merck
(
MRK |
Quote |
Chart |
News |
PowerRating)
,
+5.10% at 54.40, reported fourth-quarter earnings in-line with expectations and
has guided higher for 2003.

Defense company Northrop Grumman
(
NOC |
Quote |
Chart |
News |
PowerRating)
, +3.92% at 91.86, beat its fourth-quarter earnings estimates by $0.01
with profits of $1.83 per share.

Home product maker Proctor & Gamble
(
PG |
Quote |
Chart |
News |
PowerRating)
, +2.34% at 85.00, beat its second-quarter earnings expectations by $0.01
with profits of $1.13 per share.

Communications services company SBC
Communications

(
SBC |
Quote |
Chart |
News |
PowerRating)
, -2.13% at 24.32, met its fourth-quarter earnings
expectations with profits of $0.62 per share.

Prudential has lowered its 2003
earnings estimates on select brokerages due to events leading to potential
military action in Iraq that have weakened business. Firms with lower estimates
are Goldman Sachs
(
GS |
Quote |
Chart |
News |
PowerRating)
, +0.95% at 69.05, Morgan Stanley
(
MWD |
Quote |
Chart |
News |
PowerRating)
, +1.05% at 38.30, and Merrill Lynch
(
MER |
Quote |
Chart |
News |
PowerRating)
, +2.30% at 36.40.

Networking company Ciena
(
CIEN |
Quote |
Chart |
News |
PowerRating)
, +7.86% at 6.31, is rumored to have won a contract with AT&T
(
T |
Quote |
Chart |
News |
PowerRating)
, -3.51% at 18.70, worth $50 million.

In the biotech sector, Biogen
(
BGEN |
Quote |
Chart |
News |
PowerRating)
, +1.79% at 36.77, lowered its earnings guidance for full-year 2003
with new estimates of $1.63 – 1.78 vs. previous estimates of $1.69. The company
also reported results in line with fourth-quarter expectations, and Biosite
(
BSTE |
Quote |
Chart |
News |
PowerRating)
, -5.24% at 34.89, has raised its 2003 earnings guidance for
full-year 2003 with new estimates of $1.38 – 1.46 vs. previous estimates of
$1.30. The company also reported results in-line with fourth-quarter
expectations.

Tobacco company RJ Reynolds
(
RJR |
Quote |
Chart |
News |
PowerRating)
, -4.92% at 40.90, issued a profit warning for the first quarter with
new expectations of $0.70 – 0.95 per share vs. a previous consensus of $1.27 per
share. The company also beat its fourth-quarter earnings expectations by $0.02
with profits of $0.41 per share.

In the retail sector,
Talbots

(
TLB |
Quote |
Chart |
News |
PowerRating)
, +4.70% at 26.03, was upgraded by UBS Warburg to “buy”
from “neutral.”

Homebuilder Pulte Homes
(
PHM |
Quote |
Chart |
News |
PowerRating)
, +1.72% at 50.62, beat its fourth-quarter earnings by $0.11 with
profits of $2.78 per share.

danielb@tradingmarkets.com