This Is Why Bonds Are The Key To Stock Prices

• December 13, 2002
• Daniel Beighley

The
indexes opened sharply lower this morning, though are bouncing off
the lows mid-day. The 10 Year Note
(
TYH3 |
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PowerRating) is also lower, as it 
moves out of synch with typical market behavior. Volume remains exceptionally
light, as the Dow and S&P find support at their 50-day simple moving averages.
Technology issues are leading the Nadaq lower, with Microsoft dropping below its
200-day moving average at its intraday low. Gold
(
GCG3 |
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PowerRating) is slightly
higher after breaking out yesterday.

Dow Jones Industrial Average
(
$INDU.X |
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PowerRating) is -0.84% at 8,466.48 The S&P 500
(
$SPX.X |
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PowerRating) is
 -1.13% at 891.39. The Nasdaq
(
$COMPQ |
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PowerRating) is  -1.94% at 1,372.46.

Leading to the upside,
natural gas
(
$XNG.X |
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PowerRating), +2.49%, gold and
silver
(
$XAU.X |
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PowerRating), +1.28%, and utilities 
(
$UTIL.X |
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PowerRating),
+0.40%. 

The big losers are software
(
$GSO.X |
Quote |
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PowerRating), -3.14%, semiconductors
(
$SOX.X |
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PowerRating), -3.03%, and
Internet
(
$MOX.X |
Quote |
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PowerRating), -2.85%.

In economic news, Michigan
sentiment came in at 87.0 vs. expectations of 85.0, PPI fell 0.4% vs.
expectations of no change, core PPI dropped 0.3% vs. expectations of no
change, and business inventories rose at an expected 0.2% rate.

The 10-year U.S. Note
is -130 at 113 300.

The Dollar is -0.53 at
104.00.

Volume is at 598,908,000
on the NYSE, and 689,670,000 on the Nasdaq.

Market breadth is negative,
with NYSE declining issues over advancing issues by a ratio of 1.91, with down
volume over up volume by a 2.53 ratio. Nasdaq declining issues over advancing
issues are at 2.36, and down volume is over up volume by a 4.94 ratio.

Leading the Dow lower are:

United Technologies
(
UTX |
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PowerRating), -2.59% at 60.53, said
that it expects to meet current estimates for the full year 2002 and 2003.

Also, Intel Corp.
(
INTC |
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PowerRating), -2.42% at 18.75,
Home Depot
(
HD |
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PowerRating), -2.49% at 26.61, Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating), -2.42% at
52.86, Walt Disney
(
DIS |
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Chart |
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PowerRating), -1.78% at 16.57, Alcoa
(
AA |
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PowerRating),
-2.19% at 22.74.

Stocks in the news:

Deutsche Bank has initiated
“sell” ratings on Texas Instruments
(
TXN |
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Chart |
News |
PowerRating), -2.69% at 16.97,
Microchip Technology
(
MCHP |
Quote |
Chart |
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PowerRating), -4.15% at 24.66, Advanced Micro Devices
(
AMD |
Quote |
Chart |
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PowerRating), -4.38% at 7.41,and Atmel
(
ATML |
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Chart |
News |
PowerRating), -9.96% at 2.80. The form
also initiated “hold” ratings on Altera
(
ALTR |
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PowerRating), -3.62% at 11.70,
Xilinix
(
XLNX |
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Chart |
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PowerRating), -4.30% at 20.47, and Micron Technology
(
MU |
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PowerRating),
-6.04% at 12.75. And a “buy” rating was initiated to Intel
(
INTC |
Quote |
Chart |
News |
PowerRating),
-2.30% at 17.77.

JP Morgan also took to the
semis with the belief that the industry will remain depressed through he
first-quarter. Though counter to Deutsche Bank’s analyst action, it rates
Intel
(
INTC |
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PowerRating), 2.30% at 17.77, an “underweight” and Microchip
Technology
(
MCHP |
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News |
PowerRating), 4.15% at 24.66, an “overweight”.

Software maker  Adobe
(
ADBE |
Quote |
Chart |
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PowerRating),
+0.11% at 25.90, has beat its fourth-quarter earnings expectations by $0.02 with
profits of $0.25 per share.

Goldman Sachs has reduced its
outlook on the video game sector with downgrades to “underperform” from
“in-line” given to Electronic Arts
(
ERTS |
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PowerRating), -7.43% at 56.79,
Activision
(
ATVI |
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PowerRating), -6.89% at 15.66, and THQ Incorporated
(
THQI |
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PowerRating),
=0.46% at 14.70.

Medical equipment and supplies
company Cooper Industries
(
COO |
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PowerRating), 15.68% at 25.80, has beat its
fourth-quarter earnings by $0.01 with profits of $0.52 per share.

Auto retailer Autozone
(
AZO |
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PowerRating),
-7.66% at 67.92, has been downgraded by Goldman Sachs to “in-line” from
“outperform”.

Dow stock Coca-Cola [KO||KO],
+0.23% at 45.98, said that it is “comfortable” with its 2003 estimates, though
said it will no longer give earnings guidance in the future.

Computer services company
Electronic Data Systems
(
EDS |
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PowerRating), +2.38% at 19.33, announced a 10-year deal
with Bank of America
(
BAC |
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PowerRating) worth $4.5 billion.

From TM’s Implosion List,
capital goods company SPX Corp.
(
SPW |
Quote |
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News |
PowerRating), -11.28% at
36.95.