What Do These Numbers Mean For The Market?

  • February 28, 2003
  • Daniel Beighley

The
markets are mixed midday after the release of better-than-expected
economic numbers. Michigan sentiment, the GDP preliminary number, and the
Chicago PMI all came in ahead of expectations, though price action has retreated
considerably from earlier gains. TM’s Edward Allen says “the numbers are
indicative of slight growth in the economy, and the Chicago PMI is often a good
indication of what next week’s ISM Index report.” Volume on the session is on
the light side.

The Dow Jones Industrial
Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating) is -0.15% at 7,837.08. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
is +0.43% at 840.85. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) is +0.55% at 1,331.17.

Biggest gains are in gold
and silver
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), +1.49%, telecoms
(
$IXTC.X |
Quote |
Chart |
News |
PowerRating),
+1.32%, and semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), +1.34%.

Biggest losers on the session
are insurance
(
$IUX.X |
Quote |
Chart |
News |
PowerRating), -0.97%, forest and paper
(
$FPP.X |
Quote |
Chart |
News |
PowerRating),
-0.68%, and software
(
$GSO.X |
Quote |
Chart |
News |
PowerRating), -0.62%.

In economic news, the GDP preliminary
number came in at 1.4% vs. a consensus of 1.0%, the chain deflator was at
1.6% vs. expectations of 1.8%, Michigan Sentiment came in at 79.9 vs.
expectations of 79.2, and the Chicago PMI was at 54.9 vs. expectations of
52.5.

The 10-year U.S. Note
is +125 at 116 225.

The dollar is unchanged
at 99.87.

Gold is +4.40 at 350.60.

Crude Oil is -0.50 at
36.70.

Volume is at 716,512,000
on the NYSE, and at 753,007,000 on the Nasdaq.

Market breadth is mostly
positive, with NYSE advancing issues over declining issues by a ratio of
1.72, and up volume over down volume by a 2.13 ratio. Nasdaq declining issues
over advancing issues are at 1.08, and up volume over down volume is at a 2.52
ratio.

Biggest Dow winners are:

Hewlett Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating), +2.90% at 15.99, Walt Disney
(
DIS |
Quote |
Chart |
News |
PowerRating), +2.55% at 16.92,
Intel Corp.
(
INTC |
Quote |
Chart |
News |
PowerRating), +2.34% at 17.09, American Express
(
AMX |
Quote |
Chart |
News |
PowerRating),
+2.23% at 13.73, McDonalds
(
MCD |
Quote |
Chart |
News |
PowerRating), +2.11% at 13.53,  and Citigroup
(
C |
Quote |
Chart |
News |
PowerRating), +1.57% at 33.28.

Stocks In The News:

Restaurant company Darden Restaurants
(
DRI |
Quote |
Chart |
News |
PowerRating) received an upgrade from JP Morgan who believes the company will have
a strong first half of the year. Also in the sector, YUM Brands
(
YUM |
Quote |
Chart |
News |
PowerRating)
reaffirmed its guidance for the fourth-quarter.

Electric utilities company American
Electric Power
(
AEP |
Quote |
Chart |
News |
PowerRating), +1.96% at 21.36, announced a plan to issue 50
million shares in an effort to better its financial situation. The company also
lowered its earnings guidance to reflect the move.

Clothing retailer The Gap
(
GPS |
Quote |
Chart |
News |
PowerRating),
-10.46% at 13.27, reported earnings of $0.27 per share vs. its loss of $0.04 per
share a year ago, though was downgraded by Bank of America to “neutral” from
“buy.”

Goldman Sachs has cut its full year 2003
estimates on US drug wholesalers as it reduces earnings growth forecasts on the
sector to 15% from 20%. Companies with reduced estimates are Cardinal Health
(
CAH |
Quote |
Chart |
News |
PowerRating), -1.80% at 57.15, Amerisourcebergen
(
ABC |
Quote |
Chart |
News |
PowerRating), -1.75% at 54.38,
and McKesson Corp.
(
MCK |
Quote |
Chart |
News |
PowerRating), -3.04% at 26.48.

Home builders were the subject of negative
comments in a Wall Street Journal article which claimed  the sector may
suffer if yesterday’s Commerce Department report is an indication of weakness to
come. Company’s mentioned were Centex Corp.
(
CTX |
Quote |
Chart |
News |
PowerRating), -0.92% at 55.05,
DR Horton Inc.
(
DHI |
Quote |
Chart |
News |
PowerRating), -0.65% at 18.38, KB Home
(
KBH |
Quote |
Chart |
News |
PowerRating),
-1.27% at 46.75, Lennar Corp.
(
LEN |
Quote |
Chart |
News |
PowerRating), -0.89% at 53.60, Pulte Home
(
PHM |
Quote |
Chart |
News |
PowerRating), -0.90% at 50.66, and Toll Brothers
(
TOL |
Quote |
Chart |
News |
PowerRating), -0.77% at 19.32.

Chip giant Intel Corp.
(
INTC |
Quote |
Chart |
News |
PowerRating),
+2.34% at 17.09, has had its first-quarter estimates raised by Dan Niles at
Lehman Brothers due to strength in foreign sales. Niles believes the company
will also raise its estimates. Intel also announced that it has made a campaign
with Marriott
(
MAR |
Quote |
Chart |
News |
PowerRating), +2.19% at 30.35, to promote high speed wireless
technology. 

Software company Take-Two Interactive
(
TTWO |
Quote |
Chart |
News |
PowerRating), +2.54% at 21.02, has been upgraded to RBC Capital’s top pick with a
price target of $38.

Retailer Sears
(
S |
Quote |
Chart |
News |
PowerRating), +3.07% at
21.85, has had its credit rating cut by S&P to BBB+ from A-.

danielb@tradingmarkets.com