What Killed The Wednesday Rally

September 18, 2002
Daniel Beighley

After gapping down, the major
indexes attempted to reverse course, though headed south to the day’s lows by
11:30 a.m. ET, where the bulls took over and pushed prices higher. A selloff in
the final half-hour kept the indexes underwater for the day.

After breaking down through the
necklines of head-and-shoulders patterns yesterday, the major indexes attempted
to put in a reversal, but it just couldn’t stick into the close. Today’s selling
has been largely attributed to Dow component JP Morgan, which was pointed out by
Tony
Saliba to have a wider reaching potential into other companies.

U.S. Treasury Bonds
closed down ‘4 at 112 ’25.

In economic news, the August consumer
price index rose 0.3% for both the overall and core reading. Analysts were
expecting 0.2% for both numbers. Also, July trading showed a deficit of $34.6
billion vs. an expected deficit of $37 billion.Â

Volume was better than
average at 1,452,395,000
on the NYSE, and 1,555,680,000
on the Nasdaq.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.53, and down
volume over up volume by a 2.12 ratio. Nasdaq declining issues over advancing
issues came in at 1.57, and down volume beat up volume by a 2.26 ratio.

The
VIX
was +1.42 at 41.96. The TRIN
was +1.78 at 2.80.

Leading the Dow, photography giant Eastman Kodak
(
EK |
Quote |
Chart |
News |
PowerRating), +2.82% at 28.39, said that they expect to meet their profit outlook for
the rest of the year, as it raised estimates for its full-year operating cash
flow.

Leading the Dow down, investment bank JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating), -5.5% at 20.44, had its shares slaughtered after it lowered its third
quarter outlook while claiming results will be “well below” its second
quarter earnings.

Stocks in the news:

Financial giant Citigroup
(
C |
Quote |
Chart |
News |
PowerRating), -2.31% at 29.11, had its estimates cut by UBS Warburg by 1 cent due to a
challenging market.

Also in the financial services
business, Bear Stearns
(
BSC |
Quote |
Chart |
News |
PowerRating), +1.56% at 60.43, managed to beat its
third quarter estimates by 1 cent.

Software maker Oracle
(
ORCL |
Quote |
Chart |
News |
PowerRating), -8.08% at 8.30, announced after the bell yesterday that its fiscal
third quarter fell 33%, and warned on future profits due to a lack of corporate
spending.

Financial services company
Fannie Mae
(
FNM |
Quote |
Chart |
News |
PowerRating), +2.03% at 67.60, was downgraded by Merrill Lynch to
“neutral” from “buy.”

Drug company Abbott Labs
(
ABT |
Quote |
Chart |
News |
PowerRating), +4.74 at 40.42, was upgraded by Merrill Lynch to “buy” from
“neutral.”

Construction services company
Lennar Corp.
(
LEN |
Quote |
Chart |
News |
PowerRating), -1.97% at 56.65, beat its third quarter earnings
expectations by 1 cent with earnings ofÂ $2.01 per share. The company also
increased its guidance for the year.

Athletic wear company Nike
(
NKE |
Quote |
Chart |
News |
PowerRating), +3.23% at 43.05, beat its earnings estimates by 1 cent with profits
of $0.81 per share.

What Killed The Wednesday Rally

BUY THE FEAR, SELL THE GREED

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