MARKET TALK: The Time Has Arrived For Stocks
19 Feb 11:08
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
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11:04 (Dow Jones) Stocks are falling again, but that's not swaying the
new-found conviction of Tobias Levkovich, U.S. institutional equity strategist
at Salomon Smith Barney, who has been pretty bearish but on Tuesday is out with
a note telling investors to start buying. "It's time to step up to the market
as a cyclical turn seems to be forthcoming," Levkovich wrote. "There is a
strong likelihood that business trends are about to improve." (KJT)
10:55 (Dow Jones) UAL may have averted a downgrade for now by reaching a
tentative agreement with its mechanics union. But S&P says that while the
parent of United Air Lines avoided the most damaging near-term risk, a strike,
its B+ rating remains on review for downgrade due to the "long and difficult
task ahead" to cut labor costs. UAL's 10.67% notes of '04 are up 1/2 pt at
64-65. Shares up 14.6% at $13.02. (RTB)
10:41 (Dow Jones) Stocks, as expected, getting whacked around pretty good.
IBM near bottom of Dow, partly on its revelations, and techs and financials
lending no help in general. The Nasdaq Comp matched its intraday low of Feb. 8,
a level not seen since early November. A handful of DJIA components are higher,
led by DuPont, but the weakness is broad Tuesday, with groups seen as key
leaders not acting well. Momentum in stocks still negative. DJIA off 71 at
9832, Nasdaq drops 30 to 1774, and S&P 500 falters 12 to 1092. (TG)
10:28 (Dow Jones) High-yield bonds have opened lower along with stocks.
Decliners include Calpine (CPN) 8 1/2% notes of '11, down 3 at 72-73, and
Nextel (NXTL) 9 3/8% notes of '09, down a point at 60-61. Bucking the trend is
Level 3 (LVLT) 9 1/8% notes of '08, up 1/2 at 38. (RTB)
10:22 (Dow Jones) Options volatility rose from very low levels as stocks
opened lower Tuesday morning, the first options-trading session after February
contracts expired late last week. As investor anxiety increased a notch, the
CBOE's market volatility index, or VIX, gained 1.25 to 25.34. In the tech
sector, the Amex's Nasdaq Volatility Index, or QQV, rose 1.50 to 39.24. The
recent low volatility, and premiums, have prompted many option investors to
look for calls and puts to buy, depending on their outlook on each particular
stock. (KT)
10:15 (Dow Jones) The deal with its mechanics now announced, UAL is out of
the woods, right? No way, says Merrill. UAL still has to reach a new contract
with ramp agents, as well as conduct concession talks with every employee
group. "As ongoing labor talks, especially ones seeking concessions, have the
potential to be acrimonious, we are remaining on the sidelines with respect to
UAL shares until all labor talks have been settled," Merrill says, conceding a
pop in the shares on the latest tentative settlement. Keeps neutral rating.
Shares indeed popping, up 16% at $13.15. (TG)
10:05 (Dow Jones) Buoyed by recent sales improvements and hints that price
competition is waning, analysts have been raising their earnings outlooks for
Wal-Mart (WMT). In turn, Wal-Mart on Tuesday did the same, and its guidance of
$1.74-$1.76/share gave upside to the Street's view of $1.74. But while Wal-Mart
expects it won't have to cut prices as much as it did last year, the
mega-discounter says it's still not clear that the economy is turning a corner.
As such, Wal-Mart said its guidance assumes the economy will chug along at its
current rate. But Bill Dreher, an analyst at Robertson Stephens, says he sees
signs that the economy is improving. That could push Wal-Mart earnings to the
$1.80 level, he says. Shares recently off 0.4% at $59.80. (JMC)
10:00 (Dow Jones) Lehman recently met with Comverse Tech (CMVT), and believes
the company's sales and EPS may recover through 2002 given cost initiatives,
market share gains, new product rollouts and reordering from key customers.
Management suggested backlog may be flat to slightly up in the January quarter,
and while visibility is limited, Lehman says management is likely to remain
comfortable with existing estimates of $265M in sales and 13c for April, and
$1.2B and 60c for CY02. Keeps strong buy rating. Shares up 1.6% at $17.73. (TG)
9:50 (Dow Jones) There have been 469 1Q02 preannouncements so far, Thomson
Financial's First Call reports, of which 139 are positive, 91 in line and 239
negative. While that may appear pessimistic, the positive views actually are
outpacing those from previous quarters (by 98% in 1Q01, 36% in 2Q01 and 46% in
3Q01). Meanwhile, the warnings are running below levels experienced in 2001 (by
14% in 1Q01, 27% in 2Q01, 25% in 3Q01 and 38% in 4Q01). (GS)
9:39 (Dow Jones) Private-equity firm Leonard Green has gone to the dogs for a
second time. The firm, along with Texas Pacific Group, is a big backer of Petco
Animal Supplies, the pet store chain that hopes to price an IPO this week. This
will be Leonard Green's second reverse LBO in four months. It's last deal was
VCA Antech (WOOF), which runs veterinary hospitals. (RJH)
9:31 (Dow Jones) The dollar amount of Chapter 11 debtor-in-possession loans
approved by U.S. bankruptcy courts in the last two months has dropped by almost
half compared with the previous two months. Since Dec. 16, 2001, roughly $1.3
billion in interim and final DIP loans have been approved by the nation's
bankruptcy courts. During the previous two-month period - Oct. 16 to Dec. 15,
2001 - Chapter 11 debtors won approval of almost $2.6 billion in DIP financing.
The decline can largely be attributed to a spate of filings by smaller
companies that require less money to fund operations. Fewer billion-dollar
companies have filed for Chapter 11 protection since the middle of December
last year, with Global Crossing (GBLXQ) being the largest of the latest two
months. (TB)
9:25 (Dow Jones) Qwest Communications (Q) has $1.15 billion in debt maturing
over the next 12 months. In addition, Qwest expects 2002 capital expenditures
of $3.7 billion. In late January, Qwest lowered its expected 2002 capital
expenditures to $4 billion to $4.2 billion citing continued economic weakness.
Previously, the company had estimated capital expenditures of $4.2 billion to
$4.3 billion in 2002. (TAG)
9:12 (Dow Jones) The pharmaceutical sector is an "island of stability in
uncertain times," said Morgan Stanley analyst Jami Rubin, who believes the
group's financial health is strong. The accounting practices that have unnerved
investors do not appear to impact the large drug companies. "Big pharma uses
conservative pension assumptions and has minimal operating income inflation,
and revenue sources have high visibility," she says. (BMM)
9:08 (Dow Jones) We might be better protected from evil-doers, but not from
extreme tech valuations! Merrill's Rich Bernstein says the 1990s were unique
for tech in that the Defense Department fostered the use of innovative
technologies for commercial purposes. But, he believes that, post-Sept. 11, the
U.S. will return to a Cold War mentality regarding innovative tech, and future
returns to these companies' R&D might diminish because the companies may be
literally blocked from bringing some innovative technologies to the commercial
marketplace. (TG)
(END) DOW JONES NEWS 02-19-02
11:08 AM |
