Watch These Sectors For Signs Of A Reversal

August 5, 2003
Vincent Mao

Stocks are
lower this midday.Â Despite the much
stronger than expected ISM services report, the major indices are all in the
red, but off session lows. Costco’s
(
COST |
Quote |
Chart |
News |
PowerRating) lowered guidance is also
weighing on stocks. Stock got a small pop after the ISM non-manufacturing survey
for July came in at the highest level since October 1997. Costco
(
COST |
Quote |
Chart |
News |
PowerRating)
lowered its fourth- quarter and full-year outlook due to rising healthcare and
worker’s compensation costs. Today’s action is somewhat reminiscent of
yesterday’s activity as the markets sold off after a positive economic report,
only to recover later in the session. Keep your eyes on these market-leading
sectors for signs or a turnaround: Semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating),
Broker/Dealers
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), and Banks
(
$BKX.X |
Quote |
Chart |
News |
PowerRating). Bonds are lower after a
one-day countertrend rally. The dollar is slightly stronger, while gold is
slightly lower.Â

In economic news today, ISM
Non-Manufacturing Survey in July came in at a reading of 65.1 compared to
last month’s 60.6. This was much better than economists estimates of 58.5.Â Â

The 10-year U.S. Note
is -145 at 111 065.

The dollar is +0.05 at
96.41.

Gold is -0.60 at 350.30.

Crude Oil +0.43 at
32.27.

Volume is 615,000,000 on
the NYSE, and 863,000,000 on the Nasdaq.

Market breadth is negative,
with NYSE declining issues over advancing issues by 1.31, and down volume over
up volume by 1.55. Nasdaq declining issues over advancing issues at 1.42, and
down volume over up volume at 1.45.

Top Dow stocks are:

Stocks in the news:

Drug maker Alexioin
Pharmaceuticals
(
ALXN |
Quote |
Chart |
News |
PowerRating) is lower by more than 20% after the company’s
heart drug, Pexelizumab, failed to meet its goal of reducing heart attacks and
improve survival rates in patients undergoing coronary bypass surgeries. However
Pexelizumab did meet a secondary goal. First Albany also downgraded the stock
from “Buy” to “Neutral”.Â

Cable operator Cablevision
Systems
(
CVC |
Quote |
Chart |
News |
PowerRating) is lower by 6.7% after the company reported its
second-quarter results. The company reported earnings including gains of 56
cents a share compared to a loss of 30 cents in the year-ago quarter. Without
the gain, the company would have incurred a loss. Revenues rose by 8% to $973.3
million or below analysts’ estimates of $992.1 million.Â

Membership wholesale retailer
Costco
(
COST |
Quote |
Chart |
News |
PowerRating) is lower by 16% after the company lowered its
fourth-quarter and full-year year forecasts. Due to rising employee healthcare
costs and declining sales margins, the company now sees fourth-quarter results
coming in between 46 to 48 cents a share or down from its previous forecast of
54 to 56 cents a share. Full-year results are now expected to come in between
$1.48 to $1.50 or down from a previous forecast of $1.56 to $1.58.Â

Electronics manufacturer
Emerson Electric
(
EMR |
Quote |
Chart |
News |
PowerRating) is lower by 1.4% after the company
lower-than-expected second-quarter results. In its latest quarter, the company
earned 85 cents a share compared to 67 cents a share in the year-ago quarter.
However, excluding items, the company earned 66 cents a share or 7 cents below
consensus estimates. Revenues rose just 0.6% to $3.57 billion or slightly below
estimates of $3.58 billion. Looking ahead, the company sees full year results
coming in above $2.52 compared to current estimates of $2.49.

Online travel company
Expedia
(
EXPE |
Quote |
Chart |
News |
PowerRating) is lower by 4% despite reporting better-than-expected
earnings. The company reported second -uarter results of 38 cents a share
compared to 21 cents a share in the year-ago quarter. Expedia beat consensus
estimates by 7 cents.Â

Consumer product giant
Gillette
(
G |
Quote |
Chart |
News |
PowerRating) is fractionally higher after the company reported
second-quarter earnings that topped analysts’ estimates. The company earned 33
cents a share compared to 28 cents a share and topped consensus estimates by 4
cents. Gillette attributed the results to strong razor blade sales as well as
favorable exchange rates. However the company added that competition from Schick
could cut into its earnings.Â

Online job search site
Monster.com
(
MNST |
Quote |
Chart |
News |
PowerRating) is lower by 3.3% after the company announced that it
has ended its advertising campaigns on both AOL and MSN. The company said that
it will “redirect approximately $50 million per year on targeted, national and
local advertising initiatives”.

If you have any comments or
questions, please feel free to email me.

Vincent Mao

vincentm@tradingmarkets.com

Watch These Sectors For Signs Of A Reversal

BUY THE FEAR, SELL THE GREED

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