What The Price-Action Bellwethers Say…
Price action on the major
averages was choppy, as the session trended down for the first hour, rallied to
the day’s highs by 12:30 p.m. ET, then trended down again into the close. Leading the
advancers list were oil service, natural gas, utilities, and biotechnology with
slight gains, while computer hardware, networking, gold and silver, retail,
banks, and insurance companies were hit with the heaviest selling pressure.
Price-action bellwethers the Semiconductor
Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 1.71%, and the Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 2.00%, now have their 50-day simple moving averages below
their 200-day simple moving averages. This alone is not reason to turn bearish
on the markets, but the shift indicates a longer-term change of trend.Â
The
Dow Jones Industrial Average
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed down 1.19% at 9502.80. The
S&P 500
(
$SPX |
Quote |
Chart |
News |
PowerRating) closed down 1.05% at 1009.52. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed down 1.46% at
1496.89.
U.S. Treasury Bonds were
up 12 at 102 ’18.
In economic news, May retail sales disappointed
analysts with a 0.9% decrease vs. the 0.1% increase expected. Excluding autos,
sales fell 0.4% vs. the 0.3% increase expected. Â
Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.59, and down–volume
over up–volume
by a 2.01 ratio. Nasdaq declining issues over advancing issues came in at 1.68,
and down–volume
beat up–volume
by a 1.80 ratio. The
VIX
was up 1.72 at 28.73. The TRIN
was down 0.19 at 1.18.
Average volume had the
Dow, the S&P 500, and Nasdaq closing at the bottom of their daily
ranges.
The top sectors of the
day were the Oil Service Index
(
$OSX.X |
Quote |
Chart |
News |
PowerRating), up 1.07% at
97.00, and the Natural Gas Index
(
$XNG.X |
Quote |
Chart |
News |
PowerRating), up 0.96% at 160.35.
Losing
sectors of the day were the Disk Drive Index
(
$DDX.X |
Quote |
Chart |
News |
PowerRating),
down 4.70% at 70.09, and the GSTI Services Index
(
$GSV.X |
Quote |
Chart |
News |
PowerRating), down
2.86% at 142.22.
Computer maker
Hewlett–Packard (HPQ),
down 2.56% at 7.50, has received positive comments from Merrill Lynch,
who recommends the company based on attractive valuation and cost–saving
methods.
Auto part
maker Dana Corp. (DCN),
up 0.73% at 17.93, has raised its second quarter
outlook to 41-45 cents a share from 33-35 cents a share. The increase is due to
operating improvement and stronger North American sales.
The Wall Street Journal reports that entertainment
giant Viacom (VIA),
down 1.73% at 45.78, will
be charged with antitrust violations. The company’s CEO, Sumner Redstone, will
testify in a Texas court
today over accusations of attempting to run small video retailers out of
business.
Chip maker Microchip Technology (MCHP),
up 3.22% at 29.49, said that it expects sales for its quarter ending this month
to rise 7%
to 7.5%
from the previous three months. The company anticipated a 6%
rise in April.
Drug maker Bristol-Myers (BMY),
up 5.66% at 26.88, has reportedly
hired Goldman Sachs to advise over financial options, which include a possible
sale of the company. Other options include a merger, acquisition, or investment
in a promising smaller company.
Also in the drug making business, Eli Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating), up 2.34% at
59.87, rose after it was announced that the FDA approved the use of its drug
Sarafem for premenstrual dysphoric disorder.
Communications equipment maker Ciena (CIEN),
up 2.10% at 4.37, has been commented on by Merrill Lynch who believes the
company is overvalued and still exposed to downside risk.
Computer maker International Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating), up 1.27% at
76.50, received bullish comments from SG Cowen and UBS Warburg. UBS reiterated
its “strong buy,” claiming sound fundamentals, and SG Cowen said the
company’s restructuring will be significant to next year’s earnings.
Conglomerate Tyco International
(
TYC |
Quote |
Chart |
News |
PowerRating), up 35.96% at 13.80,
received the acceptance of the SEC for the initial public offering of its CIT
Group. The action lessened fears that the company would unable to pay its debts.
Communications services company AT&T Corp.
(
T |
Quote |
Chart |
News |
PowerRating), up 4.11% at
10.38, was given a boost as it announced Thomas W. Horton as the successor to
Charles H. Noski as chief financial officer.
Food company H.J. Heinz
(
HNZ |
Quote |
Chart |
News |
PowerRating), down 4.92% at 39.55, fell after it
was announced the company will spin off and merge some of its businesses with
Del Monte Foods
(
DLM |
Quote |
Chart |
News |
PowerRating), up 8.37% at 11.65. Heinz will own 74.5% of Del
Monte when the transaction is completed.
From TM’s proprietary Implosion
List, advertising company Omnicom Group
(
OMC |
Quote |
Chart |
News |
PowerRating) fell 12.29
at 54.62.