Will Today’s Reports Derail The Rally?

June 5, 2003
Vincent Mao

Stocks
are slightly lower this midday. The major indices are all down but
off earlier lows after a couple of less-than-stellar economic reports. Weekly
jobless claims once again rose while factory orders fell by the most in over a
year and a half. The Dow briefly breached the psychological 9,000 level but is
currently back above it. Both Johnson & Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating) and Microsoft
(
MSFT |
Quote |
Chart |
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PowerRating)
are weighing on blue chips. Morgan Stanley lowered its 12-18 month price target
on JNJ to $49 to from $59 based on increasing competition for its anemia and
arthritis drugs. Microsoft is under pressure after CEO Steve Ballamer allegedly
sent out a company email citing Linux as a threat to the company. Bonds are
higher today, relishing the worse-than-expected economic data. Gold is also
higher today but it is off its highs of $370.50. Intel
(
INTC |
Quote |
Chart |
News |
PowerRating) will give its
midquarter update after the close.Â

In economic news, Initial
Jobless Claims increased by 16,000 to 442K. This was the sixteenth week
above the critical 400K level. The less volatile four-week moving average also
increased to 430,050 from 427,500. Factory Orders for April fell by 2.9%
vs. an expected drop of 1.8%. The Commerce Department reported that this was the
biggest drop since November 2001.Â

The 10-year U.S. Note
isÂ 035 at 119 230.

The dollar is -1.364 at
92.43.

Gold is +5.80 at 369.40.

Crude OilÂ +0.42 at 30.47

Volume is at 852,000,000
on the NYSE, and at 1,300,000,000 on the Nasdaq.

Market breadth is positive,
with NYSE advancing issues over declining issues by a ratio of 1.50, and up
volume over down volume by a 1.90 ratio. Nasdaq advancing issues over declining
issues at 1.23, and up volume over down volume is at a 1.31 ratio.

Top Dow stocks are:

Stocks in the news:

Albertson’s
(
ABS |
Quote |
Chart |
News |
PowerRating) is
lower by 1.87% on double its average volume. The company reported first-quarter
results of 47 cents a share compared to a loss of 40 cents a share for the same
period a year ago. However Albertson’s did miss analysts’ estimates by 3 cents.
For fiscal 2003, the company is expecting results between $1.70 to $1.75
compared to estimates of $2.04.Â

Ann Taylor
(
ANN |
Quote |
Chart |
News |
PowerRating) is
higher by 5% on heavy volume. The retailer reported total sales in May rose
19.1% and comparable same store sales rose 9.4%. Ann Taylor also raised
second-quarter guidance to between 39 to 41 cents a share from 35 to 37 cents a
share or higher than estimates of 36 cents a share.Â

After yesterday’s jump,
Electronic Data Systems
(
EDS |
Quote |
Chart |
News |
PowerRating) is off by 5% today. Smith Barney
downgraded the stock from to “underperform” from “inline” on valuation. Smith
Barney also based the downgrade on the belief that the company will lower its
profit targets.Â

Payless Shoesource
(
PSS |
Quote |
Chart |
News |
PowerRating)
is lower by 2.75% on heavy volume after the company reported that same-store
sales in May fell by 10%. The company also warned that it will miss its
second-quarter targets of 42 cents a share.Â Â

Roadway
(
ROAD |
Quote |
Chart |
News |
PowerRating) is
off by 15% on more than ten times its average volume. The truck company warned
that second-quarter results will be less than half of what Wall Street was
expecting. The company said that pricing pressure and less-than-expected tonnage
was to blame.Â Â

Electronics retailer BestBuy
(
BBY |
Quote |
Chart |
News |
PowerRating) is higher by 6% on heavy volume. The company sees first-quarter
earnings coming in between 19 and 21 cents a share compared to estimates of 17
cents a share.Â Â

Vincent Mao

Will Today’s Reports Derail The Rally?

BUY THE FEAR, SELL THE GREED

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