MARKET SNAPSHOP
Treasurys edge up
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 8:15 AM ET Jul 5, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) -- The U.S. stock market is readying for more gains at the open Wednesday with investors set to absorb another batch of earnings pre-announcements.
September S&P 500 futures added 2.10 points, or 0.1 percent, and were trading roughly 5.80 points above fair value, according to HL Camp & Co. Nasdaq futures, meanwhile, rose 6.50 points, or 0.2 percent.
Turning to shares seeing activity before the opening bell, Computer Associates (CA: news, msgs) fell 12 1/8, or 24 percent, to 39 in Instinet. See Indications. The company warned Tuesday that it expects its first-quarter results to miss Wall Street estimates. It sees contracts in the range of $1.25 to $1.3 billion compared to the $1.22 billion registered in the first quarter last year due to weak European sales and softness in its mainframe business. The First Call estimate for Computer Associates’ first-quarter earnings-per-share stands at 55 cents. Read full story.
Treasury prices climbed across the board in early trading. The 10-year Treasury note put on 6/32 to yield 5.97 percent while the 30-year bond added 1/2 to yield 5.84 percent, adding to Monday’s gains.
In economic news, Wednesday will see the release of May leading economic indicators, expected to edge down 0.1 percent. View Economic Preview, economic calendar and forecasts and historical economic data.
In the currency market, dollar/yen added 0.4 percent to 106.63 while euro/dollar gained 0.3 percent to 0.9544. See latest currency rates.
Monday’s trading activity
Buttressed by smart gains in the financial sector, the Dow Industrials staged a nice rally during Monday’s holiday-shortened session. Catalyst for the upward move, which took the tech sector higher as well, was a dose of softer-than-expected economic data.
Big-cap stocks led the technology sector higher, with the Nasdaq 100 outperforming the Nasdaq by a wide margin. The biggest gains were seen in the chip, Internet and networking issues. The broader market saw buyers in the bank, utility, biotech and paper sectors while retail, gold and consumer stocks slipped.
“In such a thinly-traded market, buyers didn’t encounter a lot of resistance,” said Bill Schneider, head of block trading at UBS Warburg. The release of the NAPM index, he said, coincided with a turnaround in the major averages.
The June National Association of Purchasing Management index fell to 51.8 percent From May’s 53.2 percent. It was the index’s fourth consecutive decline. A survey of economists conducted by CBS MarketWatch.com had expected the June number to come in at 53.2 percent. See full story.
“The numbers show the Fed is doing a good job at slowing the economy and priming it for a soft landing,” said Brian Slater, portfolio manager at Condor Capital Management.
The Dow Jones Industrial Average tacked on 112.78 points, or 1.1 percent, to 10,560.67.
Equity trading ceased at 1 p.m. Monday ahead of the Independence Day holiday while a full close will be observed Tuesday.
Upside movers included Caterpillar, Citigroup, SBC Communications and J.P. Morgan. Among the downside leaders were United Technologies, Procter & Gamble and General Electric.
The Nasdaq Composite added 25.81 points, or 0.6 percent, to 3,991.92 while the Nasdaq 100 Index added 40.99 points, or 1.1 percent, to 3,804.78.
The Standard & Poor's 500 Index added 1.0 percent while the Russell 2000 Index of small-capitalization stocks rose 1.3 percent.
As market participants prepare for the second-quarter earnings season, Slater observed that the numbers will be closely scrutinized by a market increasingly concerned about the effects of the economic slowdown on revenue growth.
“The market will closely watch the guidance companies give for earnings growth going forward,” Slater said.
Volume checked in at 449 million on the NYSE and at 600 million on the Nasdaq Stock Market. Breadth was positive, with advancers beating decliners by 20 to 8 on the NYSE and by 20 to 18 on the Nasdaq.
Separately, Trim Tabs said U.S. equity funds saw inflows of about $8.5 billion in the three sessions ending June 29, for a monthly rate of $65.2 billion. Trim Tabs estimates an inflow of $29.2 for all equity funds in June. June’s liquidity surged to over 50 billion -- a record -- thanks to huge cash takeovers as well as firm U.S. equity fund inflows, Trim Tabs said.
Data watch
Within the NAPM number, the prices paid component came in at 61.2 percent from the previous 65.8 percent while the new orders index fell to 50.6 percent form May’s 51.1 percent. A reading above 50 percent indicates that the manufacturing sector is expanding while a reading below the 50 percent mark suggests the sector is contracting.
David Orr, chief economist at First Union, noted that employment and production were the two components that pulled down the overall NAPM index. The employment sub-component, in fact, stood at its lowest level since last July.
In other economic news, May construction spending rose by an as-expected 0.1 percent.
The NAPM and construction spending reports kick off a busy week on the economic front.
The week’s kingpin will hit the markets on Friday, when the crucial employment report for June will be released. See Economic Preview. Last month’s unexpectedly soft May jobs data unleashed a deluge of buying and triggered a 6.4 percent jump in the Nasdaq.
Schneider believes the market will discount any positive news ahead of the fact in a typical buy-the-rumor, sell-the-fact fashion.
“That seems to be the market’s personality of late,” Schneider said.
Specific movers
Bank stocks saw the largest gains Monday, with the Phlx/KBW Bank Index ($BKX: news, msgs) up 4.1 percent while the S&P Bank Index ($BIX: news, msgs) added 4.3 percent.
Many regional stocks were among the upside movers, including Wachovia (WB: news, msgs), which rose 2 3/4 to 57. The company warned of a second-quarter earnings shortfall in mid-June. Also higher Monday were shares of Bank One, up 1 7/8, or 7.1 percent, to 28 7/16, and First Union, up 1 3/8 to 26 3/16.
Informix (IFMX: news, msgs) warned Monday that it expects to report a profit of 1 to 3 cents a share in the second quarter compared to earnings of 6 cents a share in the year-ago period. First Call had expected the company to earn 12 cents a share in the quarter. The company said that second quarter revenue was essentially flat in all geographic areas, including Europe -- which has been impacted by the strength of the dollar. The stock dropped 2 3/4, or 37 percent, to 4 11/16. Read the story.
In the meantime, Sempra Energy (SRE: news, msgs) announced it expects second-quarter and full-year earnings to exceed expectations. Sempra predicts second-quarter earnings at 55 cents a share compared to the First Call estimate of 45 cents a share while full-year earnings are expected at $1.95 compared to First Call’s $1.89 a share. The company will unleash its quarterly results on July 27. Shares added 5/8 to 17 5/8. See full story.
Sprint (FON: news, msgs) added 3 7/16 to 54 7/16 after a German newspaper reported over the weekend that Deutsche Telekom was considering a $117 billion bid for the company following the rejection of the Sprint-WorldCom (WCOM: news, msgs) deal by regulators. WorldCom shed 3/4 to 45 1/8. Merrill Lynch’s Telecom Holdrs (TTH: news, msgs), of which WorlCom and Sprint are components, added 2.4 percent.
Software stocks lost ground, with the CBOE Computer Software Index ($CWX: news, msgs) off 0.5 percent. Oracle shares lost 3 7/8 to 80 3/16. Late Friday, the company (ORCL: news, msgs) announced that President and Chief Operating Officer Ray Lane resigned. See Software Report. Microsoft shares ended flat at 80.
In merger news, EGL (EAGL: news, msgs) announced it will buy Circle International Group (CRCL: news, msgs) in a half-billion-dollar stock merger. See full story. EGL said each of Circle’s 17.65 million shares will be converted into one share of EGL common stock. EGL lost 2 33/64 to 28 15/64 while Circle added 2 5/16 to 27 7/16.
Shares of Chiron (CHIR: news, msgs) added 2 to 49 1/2. The company said over the weekend that it has received the European Patent Office’s approval for its hepatitis-testing kits. Read the story. Merrill Lynch’s Biotech Holdrs (BBH: news, msgs), of which Chiron is a component, added 2.5 percent.
May Department Stores (MAY: news, msgs) will buy David’s Bridal (DABR: news, msgs) in a $436 million deal, or $20 a share. Shares of David’s Bridal surged 70.8 percent, or 8 3/16 to 19 3/4 on the news while May Dept. stores added 1/2 to 24 1/2. See full story.
May bucked the downward trend in the retail sector, with the S&P Retail Index ($RLX: news, msgs) down 0.6 percent. Among the downside movers were Gap (GPS: news, msgs), down 7/8 to 30 3/8, and Dow-components Home Depot (HD: news, msgs), off 1/4 to 49 11/16, and Wal-Mart (WMT: news, msgs), off 3/4 to 56 7/8.
Micrografx Inc.(MGXI: news, msgs) tumbled 24.3 percent, or 9/16 to 1 3/4 after the company said it reduced its U.S. workforce, restructured operations and would incur a first-quarter charge. The full impact of the restructuring actions will be reported in Micrografx’s fourth-quarter operating results, set for release in mid-August. See full story.
Shares of Suiza Foods (SZA: news, msgs) lost 1 1/4 to 47 5/8.The company was downgraded by Prudential Securities to a “hold” rating from an “accumulate.” See Rating Revisions
Treasury focus
Government prices rose thanks to a lower-than-expected NAPM report. The 10-year Treasury note gained 7/32 to yield 5.99 percent while the 30-year bond climbed 1/4 to yield 5.88 percent. See Bond Report.
Wednesday will see the release of May leading economic indicators, expected to edge down 0.1 percent.
In the currency market, dollar/yen lost 0.3 percent to 105.68 while euro/dollar lost 0.1 percent to 0.9513. See latest currency rates.
In the commodity arena, August crude ended off 22 cents to $32.50 on Friday while the Bridge CRB index lost 1.78 to 222.15 after falling a whopping 3.21 to 223.93 on Friday.
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Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
