What Sparked The Selloff?
Stocks sold
off sharply as traders focused on Intel’s revenue forecast and slower sales from
General Motors as well as nonfarm payroll data Friday.
A mixed bag of economic data showed weekly initial claims that rose to 351,000
with the ISM employment index falling to 59.7 from 61.9 in May. Construction
spending edged up a disappointing 0.3%. Oil prices rose after Saudi Arabia said
prices had come down far enough. OPEC is expected to meet July 21 to discuss
production targets, with Saudi Arabia currently producing 9.1 million barrels a
day.
Morgan Stanley said that
Intel’s Q34 could be below estimates; Intel is scheduled to report on July
13.
Cardinal Health
(
CAH |
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PowerRating)
slashed its earnings outlook on lower margins and a slower growth rate. It now
expects to earn 94 cents for next quarter and $3.54 for FY 2004. Three
brokerages downgraded the stock on the news. Time Warner
(
TWX |
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PowerRating) made a
$3 billion offer to acquire MGM Studio
(
MGM |
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PowerRating) according reports from
The Wall Street Journal and The New York Times. Terms of the deal include an
offer price of $13 a share with the assumption of $2 billion worth of debt. CIBC
reaffirmed their outperform rating on Time Warner and raised its price target on
the stock to $22. CIBC expects TWX earnings to improve by at least 10%.
Research in Motion
(
RIMM |
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PowerRating)
bucked the trend, closing at 71.47, up 3.02, as did Taser
(
TASR |
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PowerRating)
which landed a $3.6 million contract with the Houston Police Department.
In IPO action, managed care company WellCare (WCG) came at $17 and
closed at $19.53. Recent IPOs have done well, including yesterday’s Lifetime
Fitness (LTM), which closed at $22, up from its offering price.
The average equity mutual fund was -0.3% for Q2; the average bond fund lost
2.5%.
After the close, Maxtor
(
MXO |
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PowerRating) guided lower, Concurrent
(
CCUR |
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PowerRating)
warned for Q4, ESpeed
(
ESPD |
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PowerRating) cut its Q2 forecast andÂ
Able Labs
(
ABRX |
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PowerRating) received FDA approval for promethazine hydrochloride
tablets.
Tomorrow at 8:30 ET, look for nonfarm payrolls and unemployment; the market
expects 250K and 5.6%, respectively.
| Dow | -101.32 | 10334.16 |
| S&P 500 | -11.90 | 1128.94 |
| Nasdaq | -32.24 | 2015.55 |
Strong today was Natural Gas
(
XNG.X |
Quote |
Chart |
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PowerRating) +0.52% and Energy
(
DXE.X |
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PowerRating) +0.42%
Weak today were Disk
Drives
(
DDX.X |
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PowerRating) -4.03% Networking
(
NWX.X |
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News |
PowerRating) -4.00% and
Semis
(
SOX.X |
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News |
PowerRating) -3.72%.
Economic news release today:
Initial claims that rose to 351,000, construction spending that slowed down to
0.3% and ISM index that was lower at 61.1
10-year Notes were +110
at 108 215
The dollar
was -0.01 at 88.86
Gold was +1.40 at 395.50
Crude Oil was +1.60 at
38.74
Volume was 1.49 billion
on the NYSE, and 1.75 billion on the Nasdaq.
Market breadth was negative.
| NYSE | Issues | |
| Advancing | 1403 | Up Vol 314 |
| Declining | 1889 | Down Vol 1160 |
| Ratio | 1.34 | 3.69 |
| Nasdaq |
||
| Advancing | 947 | Up Vol 326 |
| Declining | 2146 | Down Vol 1405 |
| Ratio | 2.26 | 4.32 |
Stocks in the news:
Smith Barney downgraded
Yahoo!
(
YHOO |
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PowerRating) to Hold but raised its
price target to $36.50 a share.
Boeing
(
BA |
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PowerRating) fell after Merrill
Lynch downgraded their rating to Neutral on valuation concerns due to an
uncertain demand for airline and defense modernization.
Emulex
(
ELX |
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PowerRating) fell
after cutting fourth-quarter earnings targets to EPS of 18 cents a share with
revenue near $85 million. JP Morgan and Merrill Lynch downgraded the stock on
the news.
Brice Wightman
bricew@tradingmarkets.com