Today's prudentbear! -->
Market Summary June 12, 2001
Posted Daily Between 5 and 6:30 PM EST
by Lance Lewis
NOK Chokes
Asia was weaker once again last night as Japan fell 3 percent and
back below 13,000 once again. Europe was also down 3 percent
after NOK coughed up a hairball this morning over in Finland.
The US futures reacted to the NOK news and sunk deep into the
red before the open. We gapped down, took a little stutter step to
the upside and then tanked about 2 percent in the S&Ps and
more in the NASDAQ. We grinded a little lower till about mid-day
when GE suddenly flipped into the green and began to lead a
slow rally that accelerated late in the day to an all-out panic
buying run to the upside that retraced all of the day’s losses and
even thrust us briefly into the green in the major indexes. The
close, however, saw us come back in some to end down a touch.
Volume picked up a little (1.1 bil on the NYSE and 1.7 bil on the
NASDAQ.) Breadth was a hair positive on the NYSE and slightly
negative on the NASDAQ. Big winners were in the golds, as the
HUI rose 4 percent. Big losers were in the biotechs as the BTK
fell 3 percent.
NOK coughed up a hairball this morning saying that revenue
growth in Q2 would be in the single digit range instead of the 20
percent or so that they had originally guided. NOK attributed the
warning to a “recent weakening” in market conditions which was
due to “uncertain economic conditions.” Needless to say, a
warning by the largest seller of handsets did not make people
very happy, and hope for the second half was not enough to hold
back the sellers. NOK was spanked for about 20 percent.
Anything related to handsets was whacked as well, although the
late rally did largely cut the losses in stocks like TXN and RFMD.
TQNT actually ended up a few pennies. DELL’s COO Jeff Rollins
was at a tech conference today and had a few things to say about
the second half rebound. He said, “At this point in Q2 we don't
see any major uptick, and don't believe, frankly, we'll see it in Q3.
Q4 is the first opportunity that we see for some improvement in
both the macroeconomic environment and the IT purchasing
market.” It certainly sounds like DELL has lost hope for the 2nd
half and is now reduced to hoping for an “uptick” in Q4. Who
wants to pay 32x earnings for that? Somebody did, for today at
least, because they bid DELL up 3 percent and had all the other
PC stocks floating to the upside as well. I’m not going to list off
all the stocks that traded down and then flipped around because
by the end of the day things were in their usual chaos mode, and I
don’t think there’s anything to make sense out of. Whether the
late rally was real buyers, simply expiration nonsense, or buying
in front of the Kraft deal tonight I don’t know. Tomorrow’s trading
will likely tell the tale. Financials were weaker on the day and
couldn’t quite climb back out of the red zone. The BKX and XBD
both ended down less than a percent. GE rose 3 percent after
trading lower early on as speculation about the HON deal falling
through continues to swirl. There was also an article in the FT
discussing GE capital’s loan exposure to telecoms that may have
spooked some people. Credit cards were generally weaker today
as well and failed to bounce off their lows with the general market
as PVN ended down 4 percent and KRB fell 3 percent.
Oil rose 14 cents. The XOI rose a percent, and the OSX rose 2
percent. Gold rose 3.70, and lease rates were quiet once again.
The HUI jumped 4 percent. The US dollar index fell a touch and
ended back just below 120. The euro managed to rally back a
penny or so just shy of 85 cents, and the yen managed to
stabilize after yesterday’s GDP scare. Treasuries were a little
higher on the day with the yield on the 10yr falling to 5.24%.
Bad news appeared to matter in a big way early on today, but
stocks managed to bounce back rather nicely. It should be
noted that the focus of the bad news, NOK, did go out near the
lows. So, this was not a case of the “bad news being bought.” It
was more of a general market inspired bounce, which looked to
me like expiration related program buying. The 2nd half hope
appears to be slowly fading in people’s minds as more and more
companies reveal that they aren’t even sniffing a rebound in
demand yet. I guess we’ll find out tomorrow if today was a
one-day wonder due to expiration or something more. Stocks
need to hold up through expiration on Friday if the bulls want to
keep the second half hope alive in stock gamblers’ minds.
Today’s rebound was a step in that direction, but they need to
keep it going. Let’s see if they can… |
