DJ POINT OF VIEW: Great Week For Stocks Left Uncertainty
16 Apr 08:15
By Gene Colter
A Dow Jones Newswires Column
(This column was originally published Friday.)
NEW YORK (Dow Jones)--It was the best week for the stock market in months. So
where were all the cheerleaders?
There was bad news, but it didn't hurt all that much. Still, the pundits
weren't anywhere near consensus about whether stocks have seen their worst
levels, and even the bulls seemed restrained.
This ambivalence is understandable, as investors, strategists and observers
carry on a debate that's as much about "bottoms" and market index levels as it
is about the companies behind the stocks and the actual performance of their
businesses.
Simply put, it felt good to make a run back over 10000 in the Dow Jones
Industrial Average and 1900 in the Nasdaq Composite Index. Those indexes gained
more than 3% and about 14%, respectively, during the four-day trading week.
(Financial markets were closed Friday.)
Over the days ahead, however, the debate will almost surely swing back to
company news, as corporate earnings season gets underway in earnest.
So far, the companies mostly aren't saying good things. Sure, you expect wary
executives to manage expectations by painting a gloomy picture, but the early
earnings numbers as well as other evidence like recent sales reports back up a
lot of their gloom.
Indeed, high-profile earnings warnings, job-cut announcements as well as
reports of slower retail sales and rising unemployment insurance claims were
all shrugged off recently to put the major market indexes in the plus column.
Highlights from the past week included Motorola Inc. (MOT). The world's No. 2
mobile-phone handset maker missed its first-quarter number and warned that its
second quarter won't live up to Wall Street's hopes partly because, according
to the company's boss, the whole high-tech economy is in recession.
Motorola makes semiconductors, too, and while that industry has really taken
it on the chin lately, a longtime bear said during the week that it was time to
buy chip stocks again. Salomon Smith Barney's Jonathan Joseph Wednesday morning
rerated the entire chip sector to outperform from neutral. The Philadelphia
Semiconductor Index and its components rocketed up, overshadowing the bearish
reports from Motorola, which began with that company's first-quarter report the
evening before.
But listen to what Salomon's Joseph actually said. He cited "anecdotal order
and shipment data" so bad they "cannot continue for long and sector data that
suggest a fundamental bottom is only months away."
A rousing endorsement? It may not matter, since if Joseph is right about a
bottom now is a good time to buy at least these tech stocks again. Except that
he said a fundamental bottom "is only months away" - no bottom yet, then.
Just as other analysts say they want more detail before lining up behind the
chip sector again, investors need more signals from other industries that
business has truly bottomed and can grow. Outlook statements accompanying
earnings statements will be key, as will conference calls companies hold to
discuss business trends.
Of course, momentum trading remains a factor in today's stock market. It
seems to be a big part of what made the past week so great, as one day built on
another.
Just remember that while momentum helps a rising market, it can also speed a
downturn should the bad news start flowing.
-By Gene Colter, Dow Jones Newswires; 201-938-2068 e:mail:
gene.colter@dowjones.com
(END) DOW JONES NEWS 04-16-01
08:15 AM |
