From Briefing.com: Keeping in mind that the fed funds futures market had priced in a 100% probability of a 25 basis point rate cut by the Federal Open Market Committee on Wednesday, there was little surprise when it was announced that the FOMC elected to do just that. That's not to say, though, that there wasn't any disappointment as a fair number of market watchers felt the FOMC had ample reason to cut rates by as much as 50 basis points.
The FOMC, of course, didn't see things that way (San Francisco Fed President Parry was the lone exception) and it had this to say about its decision: The Committee continues to believe that an accommodative stance of monetary policy, coupled with still robust underlying growth in productivity, is providing important ongoing support to economic activity. Recent signs point to a firming in spending, markedly improved financial conditions, and labor and product markets that are stabilizing. The economy, nonetheless, has yet to exhibit sustainable growth. With inflationary expectations subdued, the Committee judged that a slightly more expansive monetary policy would add further support for an economy which it expects to improve over time.
The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome substantial fall in inflation exceeds that of a pickup in inflation from its already low level. On balance, the Committee believes that the latter concern is likely to predominate for the foreseeable future.
The long and short of it for the tech sector (literally) was that it paid to be long ahead of the announcement and it paid to be short following the announcement. To wit, the tech-heavy Nasdaq was sporting a 20-point gain, and had for most of the day, leading up to the decision at 14:15 ET. By the closing bell, however, it was down 3 points, having succumbed to a wave of selling interest in the final hour of trading that resulted in the Nasdaq's fifth, consecutive losing session.
As we indicated on Tuesday, the tech sector is trading in a manner that befits a sector in the midst of consolidation. The action on Wednesday, frankly, did little to alter that perception. If anything, it contributed to it. Once again, volume was light, concerted industry leadership was lacking, and the late-day slide served a telltale sign that bullish momentum is tiring. The takeaway for investors is that the action in the tech sector is still best observed from the sidelines. -- Patrick J. O'Hare, Briefing.com
3:19PM SanDisk -- Daily Breakout (SNDK) 40.54 +0.91: Shares of SanDisk are posting an 3.2% gain today. The $2.8 bln market-cap company makes flash memory storage products that are used consumer electronics applications including digital cameras, PDAs, and digital video recorders -- it also makes products for industrial and communications applications, such as communications routers and switches and wireless communications base stations. The shares have broken to a new 52-week high today. SNDK is projected to earn $1.49 this yr (p/e 27.2) and EPS is projected next yr at $1.32 (p/e 30.7). Note the shares have returned 34% since being profiled as the Daily Breakout on May 21st.
8:29AM Amkor upgraded at Soundview (AMKR) 11.12: Soundview upgrades to Outperform from Neutral and raises their target to $16 from $9; with rev from new customers becoming significant and additional outsourcing deals expected to be in the pipeline, firm believes rev growth opportunity has increased substantially.
8:26AM ATI Tech upgraded at Soundview (ATYT) 8.55: -- Update -- Soundview upgrades to Outperform from Neutral and raises their target to $12 from $7 following the co's stronger than expected results; firm cites notebook strength, strong gross margin outlook, strong product mix, and diversification outside of the PC mkt and into consumer.
8:21AM Advanced Micro upgraded at Bear Stearns (AMD) 6.31: Bear Stearns upgrades to Peer Perform from Underperform based on their belief that Q2 weakness is now priced in; in addition, firm does not expect further delays in the launch of AMD's new 64-bit desktop processors, after which AMD's mkt share loss to INTC should reverse, and although AMD continues to burn cash they do not expect the co to face a liquidity crunch this year.
Trident Microsystems (TRID) 9.18 -0.05: Company's video processor selected by Samsung to power 32" HDTV-ready LCD TV
Dupont Photomask (DPMI) 19.43 -1.14: Co announced that Q4 revenue is currently tracking to the low end of the range of previous guidance, or $80 mln (Reuters Research consensus $82.56 mln). DPMI also announced that CEO/Chairman Peter S. Kirlin has resigned effective immediately. No reason given for the departure.
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