Home Improvement Stocks Rise — Here’s Why
Stocks fell
Monday after a worse-than-expected industrial
production report and Goldman Sachs’s cautious IT survey. Industrial production
increased for the third time in the past four months as output in August rose by
0.1% compared to expectations of a 0.3% gain. Goldman Sachs latest IT spending
survey revealed that spending will likely show little or no growth for the year.
Next year, IT spending is projected to grow by 3.9%. Goldman also said that the
timing of a recovery in IT spending in being “pushed out”.
Insurance issues are among the
top decliners today as meteorologists are predicting that Hurricane Isabel will
hit the East Coast by Thursday. Hurricane Isabel will be the region’s biggest
since Hugo in 1989. Home improvement retailers Lowes
(
LOW |
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PowerRating) and Home Depot
(
HD |
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PowerRating)
are higher by 2.6% and 3% respectively. Tuesday look for the Fed’s decision on
interest rates. The Fed is expected to leave rates unchanged at 1%.
In other news, the 9th Circuit
Court blocked the California recall election, saying the older punch card
ballots would disenfranchise poor and minority voters.
The Dow Jones Industrial
Average
(
$INDU.X |
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PowerRating) fell 22.74 to 9448.81. The S&P 500
(
$SPX.X |
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PowerRating)
lost 3.82 to 1014.81. The Nasdaq
(
$COMPQ |
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PowerRating) is slid 9.33 at 1845.70.
The day’s leading sectors were
Retail
(
$RLX.X |
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PowerRating), +1.52%, Home Builders
(
$HGX.X |
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Chart |
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PowerRating),
+1.08%, Airlines
(
$XAL.X |
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News |
PowerRating), +0.83%, Brokers
(
$XBD.X |
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PowerRating),
+0.41% and Internet Commerce
(
$ECM.X |
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PowerRating), +0.26%.
Weak today were
Semiconductors
(
$SOX.X |
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PowerRating), -1.88%, Insurance
(
$IUX.X |
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PowerRating), -1.38%, Networking
(
$NWX.X |
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PowerRating), -1.86%, Hardware
(
$GHA.X |
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PowerRating),
-1.54%, and Gold
(
$HUI.X |
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Chart |
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PowerRating), -1.26%.
In economic news, the
Business Inventories in July fell by an expected 0.1%. Capacity
Utilization in August also came in at an expected 74.6%. Industrial
Production in August rose by 0.1%, economists were expecting a rise of 0.3%.
Lastly the New York Empire State Index in September came in at 18.35 or
comfortably above expectations of 15.
The 10-year U.S. Note
was -075 at 112 060
The dollar was +0.11 at
96.12.
Gold was -1.30 at 374.30.
Crude Oil was -0.16 at
28.25.
Volume was
1,131,704,000 on
the NYSE, and 1,449,716,000 on the Nasdaq.
Market breadth was negative,
with NYSE declining issues over advancing issues by 1.02, and down over up
volume by 1.74. Nasdaq advancing issues over declining issues at 1.20, and down
volume over up volume at 1.60.
Top Dow stocks were:
Home Depot
(
HD |
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PowerRating), +1.19 at 32.78, Caterpillar
(
CAT |
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News |
PowerRating),
+0.98 at 69, IBM
(
IBM |
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PowerRating), -0.21 at 89.49, Altria Group
(
MO |
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Chart |
News |
PowerRating),
+0.03 at 40.60, and Eastman Kodak
(
EK |
Quote |
Chart |
News |
PowerRating), +0.12 at 27.85.
Stocks in the news:
Semiconductor equipment maker
Applied Materials
(
AMAT |
Quote |
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PowerRating) fell 0.30 after Merrill Lynch
upgraded the stock from “neutral” to “buy”. Merrill based the upgrade on the
company’s broad product line as well as improving industry fundamentals.
Shares of drug maker Boston
Scientific
(
BSX |
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PowerRating) announced its drug-coated stent significantly reduced
the rate of vessel reblockage in patients. Boston also raised third-quarter sales and earnings guidance. The
company now sees revenues between $855 to $865 million and earnings including
items between 28 cents to 30 cents. Previously, the company had forecasted sales
between $810 to $840 million and earning between 24 to 28 cents.
Cubist Pharmaceuticals
(
CBST |
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PowerRating)
fell 0.70 after the company won FDA approval for its Cubicin
anti-infection treatment. Both First Albany and WR Hambrecht reiterated their
“Buy” ratings.
Flash memory manufacturer
Sandisk
(
SNDK |
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PowerRating) fell over 3% despite raising its full-year
sales estimates. Due to strong demand for its flash memory storage products, the
full year sales of $950 million plus or minus a few percentage points. Current
consensus estimates are calling for $943.32 million.
Big Blue IBM
(
IBM |
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PowerRating)
lost 0.21 after UBS upgraded the computer hardware giant from “neutral” to
“buy”. UBS based the upgrade on improving business conditions and said that the
company’s semiconductor unit it “poised to improve”. UBS also believes that
IBM’s services unit will soon sign another “mega-deal” and that its server unit
will increase its market share.
Research in Motion
(
RIMM |
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PowerRating)
slid 0.29 after a Barron’s article raised concerns about the
company’s outlook. Barron’s highlighted the company’s legal battles with
Good Technology and NTP. RIMM’s valuation was also a concern.
If you have any comments or
questions, please feel free to email me.
bricew@tradingmarkets.com