Big Earnings Week — Here’s A Preview
Stocks rose
Monday, in light — but broad based — holiday trading.
Optimism about third-quarter earnings put investors in a buying mood. More than
270 companies report earnings this week. A favorable Barron’s
article on Honeywell
(
HON |
Quote |
Chart |
News |
PowerRating), Lehman’s upgrade on infrastructure software
issues, and better-than-expected results from Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating) propelled the
major indices to new highs. Honeywell CEO Dave Anderson told Barron’s
“The company represents a very attractive investment over the next several years
because we are, I believe, at the bottom of the downturn. If we aren’t
absolutely there, we are near.” Lehman Brothers upgraded the infrastructure and
systems management software group from “Neutral” to “Positive” as they believe
that the group is poised for a strong fourth quarter.
Lehman also upgraded Veritas
(
VRTS |
Quote |
Chart |
News |
PowerRating)
and Computer Associates from “Equal-Weight” to “Overweight”. They also upped BMC
(
BMC |
Quote |
Chart |
News |
PowerRating) from “Underweight” to “Equal Weight”. Communications giant
(
MOT |
Quote |
Chart |
News |
PowerRating)
announced its third-quarter results one day earlier than expected. Motorola
announced early in response to Moody’s downgrade of the company’s long-term debt
rating to one step above junk status.
Homebuilding stocks made
all-time highs today, including Pulte
(
PHM |
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Chart |
News |
PowerRating), Centex
(
CTX |
Quote |
Chart |
News |
PowerRating), and Ryland
(
RYL |
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Chart |
News |
PowerRating).
All the major industries closed
at a new 52-week high. This was the first time the Dow closed over 9700 since
June 2002. The S&P made a 16-month high, while the Nasdaq made a 19 month high.
Bonds were closed today for the Columbus Day
holiday.
The Dow Jones Industrial
Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating) gained 89.33 at 9764.16. The S&P 500
(
$SPX.X |
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Chart |
News |
PowerRating)
added 7.24 at 1045.30. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) rose +18.22 at 1933.53.
The day’s leading sectors were
Gold
(
$HUI.X |
Quote |
Chart |
News |
PowerRating) +2.57%, Gold & Silver
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), +2.44%,
Brokers
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), +2.25%, Disk Drives
(
$DDX.X |
Quote |
Chart |
News |
PowerRating),
+2.37%,and Homebuilders
(
$HGX.X |
Quote |
Chart |
News |
PowerRating), +2.17%
Weak today were Oil Services
(
$OSX.X |
Quote |
Chart |
News |
PowerRating), -1.10% and Telecom
(
$XTC.X |
Quote |
Chart |
News |
PowerRating),
-0.27%.
No economic releases until
Wednesday.
Gold was +1.20 at 375.
Crude Oil was +0.03 at
32.06.
Volume was
1,038,864,000 on
the NYSE, and 1,491,747,000 on the Nasdaq.
Market breadth was positive,
with NYSE advancing issues over declining issues by 2.50 and up over down volume
by 3.15; Nasdaq advancing issues over declining issues at 2.25, and up volume
over down volume at 2.21.
Top Dow stocks were:
Eastman Kodak [EK|EK],
+0.59 at 23.94, J.P. Morgan [JPM|JPM],
+0.92 at 36.44, Citigroup [C|C],
+1.03% at 48.93, General Motors
(
GM |
Quote |
Chart |
News |
PowerRating),
+0.75 at 43.54, and International Paper
(
IP |
Quote |
Chart |
News |
PowerRating), +0.82 at 39.14.
Stocks in the news:
After the close,
Hollywood Entertainment
(
HLYW |
Quote |
Chart |
News |
PowerRating) reported
0.32, in-line, but with light revenues. Tuesday Morning
(
TUES |
Quote |
Chart |
News |
PowerRating)
announced a 6 million share stock offering. Lubrizol
(
LZ |
Quote |
Chart |
News |
PowerRating) warned for
Y03, seeing EPS of $2.00-2.10, ex items vs. previous guidance of $2.20-2.30.
Dow Component Honeywell
(
HON |
Quote |
Chart |
News |
PowerRating) gained 4% after the company was the subject of a
positive Barron’s article. The article suggested that the diversified
controls company could be poised for recovery. Separately the company announced
on Friday that it would acquire Canada’s Silent Witness Enterprises for $8.53 a
share in an all cash deal.
Casino game maker
International Gaming Technology
(
IGT |
Quote |
Chart |
News |
PowerRating) rallied 11% after the
company received a large order from Harrah’s Entertainment
(
HET |
Quote |
Chart |
News |
PowerRating). The order
calls for 11,000 gaming machines and it is one of the company’s largest single
orders in history. IGT is also on track to sell 60,000 to 65,000 gaming machines
for fiscal 2004.
The world’s second-largest cell
phone maker, Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating), rose 1/2% after the
company reported better-than-expected third-quarter results. Due to strong
demand for the company’s cell phones, Motorola reported earnings excluding
charges of a nickel a share, compared to consensus estimates of 3 cents a share.
Revenues rose 5% to $6.83 billion. Looking ahead, the company sees
fourth-quarter results between 11 to 15 cents a share, with current estimates
calling for 12 cents a share.
Sporting goods retailer
Sports Authority
(
TSA |
Quote |
Chart |
News |
PowerRating) gained 8% after the company raised its
third-quarter guidance. Due to stronger-than-expected sales, the company now
sees third-quarter results triple its prior forecast. The nation’s top sporting
goods chain now sees earnings of 13 to 15 cents a share, compared to consensus
estimates of 13 to 15 cents a share.
Internet Auctioneer eBay
(
EBAY |
Quote |
Chart |
News |
PowerRating) fell 2% after Smith Barney downgraded the company from
“Hold” to “Sell”. Smith Barney based the downgrade on the slowing growth of eBay’s eBay Motors unit. eBay Motors has accounted for 35% to 40% of revenues in
the last two years, but since then, motor sales only account for 28%. The firm
also cut eBay’s price target from $55 to $48.
Tuesday before the open, look
for earnings from Johnson & Johnson (est. 0.68), Bank of America
(est. 1.70), and AmSouth (est. 0.44) and after the close,
Merrill Lynch (est. 0.85).
If you have any comments or
questions, please feel free to email me.
bricew@tradingmarkets.com