Will The Dow Extend Its Eleven-Month High?

June 12, 2003
Vincent Mao

Stocks
are higher this midday. The major indices are all near the highs of
the day after some early morning weakness. Mixed economic data did have the
indices struggling for direction early on. The Dow surpassed Friday’s high but
has since backed off. Retail sales in May rose nicely but the job market is
still lagging. Semiconductors are under pressure again after yesterday’s warning
from Texas Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating), a downgrade on Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating)
also added to the weakness. Oil, housing, and energy stocks are also in the red
after earlier gains. Peoplesoft’s
(
PSFT |
Quote |
Chart |
News |
PowerRating) board unanimously rejected
Oracle’s
(
ORCL |
Quote |
Chart |
News |
PowerRating) unsolicited bid. Three former Dynegy
(
DYN |
Quote |
Chart |
News |
PowerRating) were charged
with fraud for their roles in Project Alpha. Bonds are again higher while both
gold and the dollar is lower.

In economic news, Retail Sales
in May came in at +0.1% vs. +0.0%, Ex-Autos sales came also came in a +0.1% vs.
+0.2%. Lower gasoline sales softened what would have been a 0.4% rise. Business
Inventories for April came in at +0.1% vs. +0.2%. And initial jobless claims
came in – 17,000 to 430,00 or higher than the expected 425K. Lastly, the
four-week moving average rose by 2,250 to 433,750.

The 10-year U.S. Note
is +105 at 120 175.

The dollar is +0.08 at
92.94.

Gold is -2.60 at 353.70.

Crude Oil -0.60 at
31.76.

Volume is at 768,000,000
on the NYSE, and at 1,000,000,000 on the Nasdaq.

Market breadth is positive,
with NYSE advancing issues over declining issues by a ratio of 1.21, and up
volume over down volume by a 1.22 ratio. Nasdaq declining issues over advancng
issues at 1.01, and up volume over down volume is at a 1.38 ratio.

Top Dow stocks are:

Stocks in the news:

Cell Therapeutics
(
CTIC |
Quote |
Chart |
News |
PowerRating)
is higher by 11% on more than triple its average volume. The company announced
that the FDA approved its supplemental new drug application for its acute
promyelocthic leukemia drug, Trisenox.

Kinder Morgan
(
KMI |
Quote |
Chart |
News |
PowerRating)
is higher by 1.30% after the company more than doubled its annual dividend. Due
to changes in recent tax laws, the company has increased its dividend from $0.60
to $1.60 per share.

Freddie Mac
(
FRE |
Quote |
Chart |
News |
PowerRating) is
off by 5.75% on heavy volume. The shares are just off a 52-week low after the
company revealed the compensation packages for its former executives. Former
Chairman Leland Brendsel will receive his base salary of $1.18 million for two
years and a pro-rated bonus of $860K. Former president David Glenn will receive
his vested stock.

Heinz
(
HNZ |
Quote |
Chart |
News |
PowerRating) is lower
by 3% on heavy volume. The company reported fourth-quarter results excluding a
one-time charge of 52 cents a share, missing analysts’ estimates by a penny.
Full-year results matched expectations. Looking forward, the company is
expecting to earn between $2.15 and $2.25, compared to estimates of $2.21.

H&R Block
(
HRB |
Quote |
Chart |
News |
PowerRating) is
lower by 4.9% on heavy volume. The company reported fourth-quarter results
excluding a one-time charge of $2.77 a share compared to estimates of $2.83. The
company blamed the weakness on the weak job market which led to fewer tax
filers.

Intermune
(
ITMN |
Quote |
Chart |
News |
PowerRating) is
off by 29% on extremely heavy volume after the company issued a revenue warning.
The company cut its revenue estimate for the year to between $135 million – $150
million from $160 – $180 million. Intermune cited weak demand for Actimmune.
Bear Stearns also downgraded the stock from "outperform" to "underperform."

Medimmune
(
MEDI |
Quote |
Chart |
News |
PowerRating) is
lower by 3.5% on heavy volume. The shares are under pressure today after UBS
downgraded the stock from "buy" to "neutral" based on valuation. UBS also
believes that the company will receive approval from its FluMist during the
second quarter.

Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating)
is lower by 2% after UBS downgraded the stock from "neutral" to "reduce." UBS
based the downgrade solely on valuation but lifted its price target to $28.50
from $25.

vincentm@tradingmarkets.com

Will The Dow Extend Its Eleven-Month High?

BUY THE FEAR, SELL THE GREED

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