What’s On Traders’ Minds

  • February 15, 2002
  • Daniel Beighley

The
major averages dropped hard in the first half hour of trading, made
three attempts to rally, though never bucked the down trend. Pharmaceutical,
oil, and airline stocks held slight gains at the close, with networking,
broker/dealer, and Internet stocks slammed. 

The Dow Jones Industrial
Average
(
$INDU |
Quote |
Chart |
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PowerRating) closed down
0.99% to
9,903.04.
The S&P 500
(
$SPX |
Quote |
Chart |
News |
PowerRating) closed down
1.09%
to 1,104.28.
The Nasdaq [$COMPQ |$COMPQ] closed down
2.07%
to 1,805.19.

Continued fears over accounting
practices were on the minds of traders, as new inquiries into the methods of IBM
(
IBM |
Quote |
Chart |
News |
PowerRating) and Nvidia
(
NVDA |
Quote |
Chart |
News |
PowerRating) were announced. The University of Michigan’s
preliminary sentiment report came in at 90.9, from 93.0 the previous month,
and is the first decline in five months. Economists polled by Thompson Global
Markets were expecting a number of 93.5.

Other economic news offered
little surprise. The producer price index report showed a 0.1% increase,
with the core declining 0.1%, economists were looking for a 0.2% decline.
Industrial production declined 0.3% (after revision), and capacity utilization
came in at 74.2%, both in line with expectations.

Overall NYSE volume was
1,346,119,000.
NYSE advancing issues were 1,545,
with up volume at 463,005,000;
declining issues were 1,540,
with down volume at 874,461,000.
Overall Nasdaq volume was
1,592,159,000. Nasdaq advancing issues were
1,422,
with up volume at 306,156,000;
declining issues were 2,050
with down volume at
1,267,956,000.
The

VIX was up 1.15 to 24.04. The

TRIN was up 0.61 to 1.89. 

Below-average volume on the
session, had the Dow closing below its 200-day MA, the S&P 500 just above its
20-day MA, and the Nasdaq below its 20-day MA. With three touches, the downward
trend lines  on the S&P 500 and Nasdaq are now valid, and not a great sign for
the bulls. The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) touched, and closed
above its 200-day MA. The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating)  closed
below its 200-day MA.

Top sectors of the day were the
Dow Jones Equity REIT Index
(
$DJR.X |
Quote |
Chart |
News |
PowerRating) up 0.60% at 152.56,and the
Deutsche Bank Energy Index

(
$DXE.X |
Quote |
Chart |
News |
PowerRating) up 0.52% at 379.92.

Losing sectors of the day were
the Networking Index
(
$NWX.X |
Quote |
Chart |
News |
PowerRating) down 4.24% at 253.72, and the
Securities Broker Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating) down 4.05% to 476.51.

Computer maker Dell Computer (DELL),
down 4.30% to 25.66, reported that their fiscal fourth quarter net income rose
5%, citing stronger-than-expected PC sales. The company also warned that profits
would slip in the first quarter.

Oil services company Haliburton (HAL),
up 1.63% to 16.29, released that it has won a restraining order for 200,000
asbestos claims filed against its Dresser Industries unit. As a result of the
ruling, UBS Warburg upgraded the shares to Buy from Hold.

Semiconductor company Atmel Corp. (ATML), 
down 0.77% to 7.69, benefited from an upgrade from CS First Boston to Buy from
Hold. Also upgraded were Micron Technology (MU),
down 3.01 to 37.10, Cypress Semi (CY), down
0.05% to 21.59%, Integrated Device (IDTI),
down 0.19% to 30.89, Microchip Tech (MCHP),
down 3.03% to 37.14, and Silicon Storage Tech (SSTI),
up 4.07% to 8.43.

Computer graphic chip maker Nvidia Corp. (NVDA),
down 7.77% to 57.33, fell after it was announced that the SEC has
begun an investigation of its accounting practices. Nvidia was the best
performer in the S&P 500 last year. In the year 2000, Enron held the title.

Computer hardware maker International Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating),
down 4.63% to 102.90, also experienced investor fear over accounting issues
after an article in the New York Times brought  into question the
accounting methods of a recent sales transaction. The transaction in question
involved the sale of its optical transceiver unit to JDS Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating),
down 0.81% to 6.031. IBM denied the allegations.

Biotechnology company ImClone Systems
(
IMCL |
Quote |
Chart |
News |
PowerRating), up 4.43% to 18.38,
was the subject of a takeover by Carl Icahn to purchase some $500 million of
IMCL common stock. Imclone Systems countered, by proposing a Stockholder Rights
Plan to protect the rights of stockholders against unsolicited attempts to
acquire the company.

Semiconductor company Analog Devices
(
ADI |
Quote |
Chart |
News |
PowerRating), up 3.13% to 41.21,
said that their net income had dropped 87% for the fiscal fourth quarter, with
revenue down 49%. The company was positive about this year’s prospects as orders
increased in January.

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