Earnings Take Center Stage
A strong showing by the biotechs and stronger-than-expected earnings from
fiber-optic cable-maker Corning
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PowerRating) helped motivate technology stocks
Monday, as the Nasdaq added about 0.7% to last week’s 5.5% gain. The Dow and
S&P 500, however, failed to join the Nasdaq to the upside, and each finished
roughly flat.
Volume remained about equal with Friday’s levels as 1.6 billion shares
changed hands on the Nasdaq and 950 million shares traded on the NYSE. Traders
cited cautiousness ahead of Tuesday’s CPI numbers as a possible reason for the
day’s lack of conviction. Generally, though, analysts were impressed with the
market action following last week’s solid gains and remain very optimistic about the upcoming earnings season.
Paul Desmond, President, Lowry’s Reports: “What a difference a week
makes. The stalemate of weak demand and weak supply that has plagued the broader
market for the past several months appears to have been decisively broken last
week. And, several key indicators, including a new intermediate-term buy signal,
suggest this new burst of strength is more than just a Summer rally.
According to preliminary numbers, the Nasdaq added 28.49 to 4274.67, the Dow
eased 8.48 to 10,804.27, and the S&P 500 gained about a half of a point to
1510.50.
Top sectors included biotechnology
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$BTK.X |
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$HCX.X |
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up 2.4%, drugs
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$DRG.X |
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(
$SOX.X |
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2.2%.
On the downside were chemicals
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$CEX.X |
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XBD.X |
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down 3.2%, and oil services
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$OSX.X |
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Corning
(
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PowerRating) turned in second quarter earnings of 94 cents per share,
well ahead of the 80 cents analysts expected. That helped send Corning up 12 1/4
to 279 1/4, and also helped take optical networkers JDS Uniphase
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PowerRating) up
4 5/16 to 115 15/16 and SDL Inc.
(
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PowerRating) up 24 1/2 to 394.
B2B Internets generally gave back some of last week’s big gains, with the
exception of business portal VerticalNet
(
VERT |
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62 1/32. Goldman Sachs added VerticalNet to its recommended list and that
appeared to help power the business community portal on Monday.
Monster cap techs posting good gains were Cisco
(
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new two-month high of 69 9/16, Qualcomm
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Sun Microsystems
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PowerRating), up 1 7/16 to 96 3/8.
Internets posting wins were Seven Twenty-Four Solutions
(
SVNX |
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PowerRating), up 18%,
Lycos
(
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PowerRating), up 16%, Checkpoint
(
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PowerRating), up 11%, EarthLink
(
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up 9%, and Go2Net
(
GNET |
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PowerRating), up 8%.
With regards to earnings season, Paul Rabbitt, President,
RabbittAnalytics.com was optimistic. “I think the Fed is probably done
tightening. You should expect the market to roar ahead, driven by surprisingly
strong second quarter earnings,” he said.
“A month ago, First Call expected S&P second quarter earnings to be
a respectable 19%, down from 23% in the first quarter. Now, it looks like the
second quarter will stay at the torrid 23% level,” he added.
Traders now look toward Tuesday and the release of the Consumer Price Index
and CPI core rate at 8:30 AM ET. Street estimates look for a 0.5% increase in
the CPI and a 0.2% increase in the core rate.
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