Three Pieces Of The Puzzle

January 16, 2002
Daniel Beighley

The
major indexes gapped down off the opening bell, and trended south for
most of the day on the heels of disappointing earnings news. Healthcare and
airline stocks represented what little there was of the day’s strength, as
Internet, networking, and semiconductor stocks experienced the day’s heaviest
selling.Â

Three key pieces of
economic data were released today, indicating a mixed assessment of the recovery
process:

The Commerce
Department reported that business inventories fell 1% in November, higher
than the 0.08% analysts polled by Thompson Global Markets had predicted, and
lower than the 1.6% for October. This is the tenth consecutive monthly increase,
with stockpiles down to their lowest in two years.

The Labor Department
announced that the prices of consumer goods had fell 0.2% in December,
but rose 0.1% in the core index. Analysts polled by Thompson Global Markets had
predicted a 0.1% drop for the prices of consumer goods, and a 0.2% increase in
the core index, which excludes food and energy sectors.

The so-called “beige
book” from the Federal Reserve said there remained “indications of
caution” in the economy, citing “weak or down” manufacturing in
most areas of the country. The U.S. economy remains weak, and despite
indications of strength, the timing of a recovery is uncertain.

Overall
NYSE volume was 1,453,657,000.
NYSE advancing issues were 1,129,
with up volume at 272,101,000;
declining issues were 2,003,
with down volume at 1,163,727,000.
Overall Nasdaq volume was 3,563,120,000.
Nasdaq advancing issues were 3,045,
with up volume at 1,062,000,000;
declining issues were 4,169 with
down volume at 2,463,544,000.
The VIX
was up 0.84 to 25.26. The TRIN
was up 1.12 to 2.41.

Average volume on
the session saw the Dow and the S&P 500 cruise south of their 50-day MAs, as
the Nasdaq was halted at this mark.

The world’s number 1
chip maker Intel
(
INTC |
Quote |
Chart |
News |
PowerRating), down 2.85% to 33.69, announced that it had
made a better-than-expected gain in its fourth quarter profit outlook, but net
income had fallen 11% as it forecasts only modest improvement for next quarter.

The US’s second
largestÂ investment bank JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating), down 3.51 to 36.54,
reported a fourth quarter loss as its exposure to the Enron and Argentina crises
as it posted earnings of 18 cents a share, compared to 34 cents this time last
year.

Online auctioneer eBay
(
EBAY |
Quote |
Chart |
News |
PowerRating), down 6.36% to 59.96, reported that their revenues had grown 64
percent in the fourth quarter, while earnings rose 9 percent. The company also
raised its sales forecasts for the first half of this year.

The world’s biggest
auto maker General Motors
(
GM |
Quote |
Chart |
News |
PowerRating), down 0.10% to 49.91, announced that it
earned 60 cents a share, beating analysts’ expectations by a penny. Vice
chairman and chief financial officer John Devine said results were hurt by
devaluation of the peso in Argentina and lower profits on vehicle sales.

AMR
(
AMR |
Quote |
Chart |
News |
PowerRating),
up 0.85% to 26.01, the parent of American Airlines and TWA, postedÂ better-than-expected
earnings for the fourth quarter, but posted its biggest loss ever of $498
million.

The second airline
company to post quarterly earnings since the Sept. 11 attacks, Continental
Airlines
(
CAL |
Quote |
Chart |
News |
PowerRating), up 5.68% 31.06, said that it had lost $149 million, also
narrower than analysts had expected.

Pharmaceutical and
health care products maker Abbott Laboratories
(
ABT |
Quote |
Chart |
News |
PowerRating), up 1.33% to
56.51, reported a 19% drop in fourth-quarter net income as it had two major
questions to absorb. The company also said it expects to meet first-quarter
expectations.

Three Pieces Of The Puzzle

BUY THE FEAR, SELL THE GREED

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