Balancing The Bull And Bear Arguments
Stocks
were lower Monday on continued fears over the Mid-East and political pressures
in Asia. A suicide car bomber in Baghdad killed the head of Iraq’s
governing council, Izzedin Salim. The US stumbled upon an artillery shelled with
a small amount of sarin agent. Indian stocks fell as much as 17% before closing
down 11% on concerns of its new left-wing government. Foreigners reportedly have
sold $615 million worth of their investments over the last 9 trading sessions.
The market continues to balance
the bear argument — that we have underestimated global risk, with the bull
argument — that the economy and earnings continue expanding. Airlines fell on
higher crude prices, as money shifted into gold stocks.
Crude oil closed at $41.55
after reaching an intraday high of $41.85, the highest price on record. Crude
oil prices are up $9 a barrel, or 28%, since the end of last year.
The Nasdaq is now down 13% from
its January highs and the SOX is off 21% from its January highs.
Lowe’s
(
LOW |
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Chart |
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PowerRating)
reported earnings of $455 million with sales up 22% to $8.68 billion and
same-store sales up 9.9%. The company reported strength in every product
category and every geographic region. Profit margins rose to 33% and expects
second-quarter earnings to reach 89 cents and sales to grow 19%.
After the close, Computer
Sciences
(
CSC |
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Chart |
News |
PowerRating) beat by 0.02, Agilent
(
A |
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PowerRating) was in-line and guided
Q3 higher; Millenium Pharmaceuticals
(
MLNM |
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Chart |
News |
PowerRating) reported positive data
on its phase III APEX study.
| Dow | -105.96 | 9906.91 |
| S&P 500 | -11.62 | 1084.08 |
| Nasdaq | -27.61 | 1876.64 |
Strong today were Amex Gold
Bugs
(
HUI.X |
Quote |
Chart |
News |
PowerRating) +1.52%, Gold and Silver
(
XAU.X |
Quote |
Chart |
News |
PowerRating) +0.30%,
Oil Services
(
OSX.X |
Quote |
Chart |
News |
PowerRating) +0.39%.
Weak today were Networking
(
NWX.X |
Quote |
Chart |
News |
PowerRating) -2.92%, Hardware
(
HWI.X |
Quote |
Chart |
News |
PowerRating) -2.05%, Brokers
(
XBD.X |
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News |
PowerRating)
-2.05% and Cyclicals
(
CYC.X |
Quote |
Chart |
News |
PowerRating) -1.83%.
Economic news releases today:
NY Empire State Index that was below expectations for the month of May at 30.21
The dollar
was -0.76 at 90.90
Gold was +0.32 at 379.22
Volume was 1.43 billion
on the NYSE, and 1.5 billion on the Nasdaq.
Market breadth was negative.
| NYSE | Issues | |
| Advancing | 1043 | Up Vol 183 |
| Declining | 2271 | Down Vol 1112 |
| Ratio | 2.17 | 6.07 |
| Nasdaq |
||
| Advancing | 760 | Up Vol 198 |
| Declining | 2416 | Down Vol 1198 |
| Ratio | 3.17 | 6.05 |
Stocks in the news:
XTO Energy
(
XTO |
Quote |
Chart |
News |
PowerRating) agreed to pay
$1.1 billion in cash to purchase some of ChevronTexaco’s
(
CVX |
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Chart |
News |
PowerRating) US
natural gas and oil fields. XTO expects to boost daily production of oil by
14,000 barrels and gas by 88 million cubic feet.
KMart
(
KMRT |
Quote |
Chart |
News |
PowerRating) reported earnings
of $93 million from a loss of $862 million a year ago. Same-store sales declined
by 12.9% with total sales down 25.3% to $4.6 billion
The SEC is expected to charge five former
Lucent
(
LU |
Quote |
Chart |
News |
PowerRating) executives for their roles in LU’s accounting problems. The
SEC fined the company $25 million in its settlement of civil fraud allegations
for failing to cooperate in its accounting investigation.
Brice Wightman
bricew@tradingmarkets.com