What’s Fueling The Reversal

  • August 30, 2002
  • Paul Letourneau

The markets opened lower this
morning, then soon changed direction in positive reaction to key economic
releases. At midday, the major indexes are flirting with their unchanged levels.

The biggest advances are in
Internet, networking, biotechnology, and gold and silver.

Leading the losers are oil
service, transportation and energy.

In economic news, personal
income came in unchanged vs. an expected 0.3%. The University of
Michigan’s sentiment number came in at 87.6 vs. an expected reading of 88.
Also, the Chicago PMI was reported at 54.9 vs. an expected 52.00.

The
Dow Jones Industrial Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating) is up 1.02% at 8759.91 The
S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) is up 0.87% at 92.87 at. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) is down 0.34% at 1331.16.

U.S. Treasury Bonds were
are up ’13 at 110 ’31.

Volume is on the light side at
507,129,300
on the NYSE, and 549,968,866
on the Nasdaq.

Market breadth is mixed,
with NYSE advancing issues over declining issues by a ratio of 1.85, and up–volume
is over down–volume
by a 1.71 ratio. Nasdaq declining issues over advancing issues came in at 1.08,
and down–volume
beat up–volume
by a 2.00 ratio.

Computer hardware maker Sun Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating), down 2.08 at 3.75, announced weak sales in a progress report, as
companies put off the purchase of new technology. 

Chip maker Novellus
(
NVLS |
Quote |
Chart |
News |
PowerRating), up 2.09% at 24.80,
lowered its earnings expectations for the third quarter with new bookings
guidance of $220 mln vs. July guidance of $250 mln.

Also in the chip business, Merrill Lynch downgraded the
following companies to “neutral” from “buy”:  KLA-Tencor
(
KLAC |
Quote |
Chart |
News |
PowerRating), down 1.54 at 33.10, Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating), up 1.41
at 16.63, Lam Research
(
LRCX |
Quote |
Chart |
News |
PowerRating), down 2.92% at 11.60, and Novellus
(
NVLS |
Quote |
Chart |
News |
PowerRating), up 2.26% at 24.84.

Communications services company Bell South
(
BLS |
Quote |
Chart |
News |
PowerRating), down 5.11% at 23.00, lowered its earnings expectations for 2002 by 7
cents a share.

Also in the communications business, Goldman Sachs cut its
estimates on Verizon Communications
(
VZ |
Quote |
Chart |
News |
PowerRating), down 2.26% at 3.20, and SBC
Communications
(
SBC |
Quote |
Chart |
News |
PowerRating), down 3.41% at 24.92.

Drug maker Bristol Myers Squibb
(
BMY |
Quote |
Chart |
News |
PowerRating), up 3.99%
at 25.26, is being reported by Business Week magazine as being thought of
by “pros” as on its way to recovery and the potential target of
hostile bids for a takeover.

Online retailer Amazon.com
(
AMZN |
Quote |
Chart |
News |
PowerRating), down 0.46%
at 15.10, announced that Thomas Szkutak will become its chief
financial officer. Szkutak was formerly the chief financial officer of GE.