Stocks take a breather

Stocks take a breather

NEW YORK (CBS.MW) – The major averages paused Friday following an
unrelenting run-up over the past few trading sessions.

The Dow Jones Industrial Average ($DJ) lost 61 points, or 0.6
percent, to 10,632.

The Nasdaq Composite ($COMPQ) declined 27 points, or 1.2 percent, to
2,156 while the Nasdaq 100 Index ($NDX) gave up 31 points, or 1.6
percent, to 1,921.

The Standard & Poor’s 500 Index ($SPX) fell 0.7 percent while the
Russell 2000 Index ($RUT) of small-capitalization stocks shaved 0.8
percent.

Volume came in at 128 million on the NYSE and at 256 million on the
Nasdaq Stock Market. Market breadth was marginally negative, with
decliners outnumbering advancers by 14 to 8 on the NYSE and by 16 to 10
on the Nasdaq.

Elsewhere, Trim Tabs estimated that all equity funds had inflows of
$2.2 billion over the past four business days ending April 18, compared
with inflows of $3.5 billion during the prior week. Equity funds that
invest primarily in U.S. stocks had inflows of $3.2 billion, compared
with inflows of $1.3 billion the prior week.

Specific movers

Brocade Communications (BRCD) rose 3.1 percent even after informing
investors that it now sees second-quarter earnings coming in at 5 to 6
cents a share vs. the 11 cents a share that had been expected by First
Call/Thomson Financial. Revenue for the second quarter is now expected
to be down 30 percent vs. the first quarter of 2001.

Microsoft gained 2.9 percent to $70. After the close Thursday, the
software monolith (MSFT) posted a profit of 44 cents in its third
quarter, beating the First Call estimate by two cents and ahead of the
43 cents made in the year-ago period. Revenue was up 14 percent from the
year-ago period and better than Wall Street had expected. But the
software colossus said its expects to earn 41 to 42 cents a share in its
fourth quarter, less than the 43 cents that had been anticipated by Wall
Street.

Sun Microsystems saw its shares drop 6.8 percent. After the close
Thursday, the server giant posted a third-quarter profit of 8 cents a
share, a penny ahead of the consensus estimate but lower than the 14
cents a share earned in the year-ago period. Going forward, Sun said
fourth-quarter revenue would grow slightly and that earnings would be
flat to slightly lower than results in the third quarter. Analysts had
been expecting EPS of 10 cents for the fourth quarter. For fiscal year
2002, Sun said revenue would grow around 15 percent. Merrill Lynch upped
its view on Sun to an "accumulate" from "neutral,"
indicating that it sees more risk behind the company rather than in
front of the company.

Canada’s Nortel Networks (NT) fell 3.9 percent. The networking and
fiber-optic giant reported a first-quarter loss of 12 cents a share late
Thursday, matching the lowered Wall Street consensus estimate. In the
same period lat year, Nortel earned 12 cents a share. Further, the
company also said it would slash another 5,000 jobs, bringing the total
to 20,000 so far this year.

Hardware shares retreated after a smashing showing on Thursday.
Gateway (GTW) posted after the close Thursday a first-quarter loss of a
penny a share, in line with the consensus estimate. It was the PC
maker’s first loss since the third quarter of 1997. The company said it
expects to break even during the second quarter. The stock fell over 7
percent. IBM, the Dow’s biggest gainer Thursday, edged down 0.2 percent,
Dell Computer added 1 percent while Compaq slumped 2.2 percent.

More Dow companies report

Three Dow companies unveiled their results.

Honeywell International (HON), a Dow component, said first-quarter
earnings per share came in at 51 cents a share, missing the First
Call/Thomson Financial estimate of 58 cents a share. The company plans
to cut a total of about 6,500 jobs, or about 5 percent of its work
force. Honeywell said first-quarter EPS were substantially affected by a
challenging economic environment and continued high energy and raw
material costs. Honeywell said it’s pleased with the progress of the
pending merger with General Electric. The stock fell 1.1 percent.

Merck (MRK) posted a profit of 71 cents a share, in line with Wall
Street expectations and up 13 percent from the year-ago period. Going
forward, the drug behemoth said it remained comfortable with the current
range of 2001 EPS expectations of $3.15 to $3.25. Merck fell 3.5
percent.

And Boeing (BA) registered a first-quarter profit from operations of
89 cents a share, smashing the First Call estimate by 9 cents a share.
Revenue rose 34 percent in the quarter vs. the year-ago period. Looking
ahead, Boeing reaffirmed its previous outlook. The stock rose 3.1
percent.

In the meantime, Dow stock AT&T (T) said in a filing with the SEC
that it’s expecting to take a first-quarter charge in the range of $740
to $780 million, which will have a net income impact of $280 to $320
million as a result of its 23 percent stake in troubled broadband
provider ExciteAtHome. AT&T shares slipped 1.6 percent.

Treasury focus

In Treasury market, where investors of long-dated issues have seen
their investments slammed in recent sessions, some mild buying emerged.
Expected weakness in the equity market is providing the fodder.

The 10-year Treasury note was up 1/8 to yield ($TNX) 5.285 percent
while the 30-year government bond added 2/32 to yield ($TYX) 5.78
percent.

No data is set for release on Friday. View Economic Preview and
economic calendar and forecasts.

In the currency arena, dollar/yen piled on 1.1 percent to 122.35
while euro/dollar edged up 0.3 percent to 0.9005.