MARKET TALK: Small Chance Of Half-Point Move This Month
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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2:26 (Dow Jones) July Fed funds up 1.5 BP at 96.28. Trader says contract
shows 25 BP rate cut is done deal at June FOMC, but July also pricing in 12%
chance of 50 BP cut at same meeting. (SPC)
2:10 (Dow Jones) Morgan Stanley's Gillian Munson issued a cautious 2Q
forecast for data-storage giant EMC Corp. (EMC). The analyst believes the
quarter is "tracking slowly" because of the economic slowdown and because
EMC pushed hard to meet its 1Q numbers. Munson has lowered her 2Q EPS
estimate to 17c from 18c. First Call consensus is 18c. Fierce price
competition in data storage is also likely to pressure EMC's gross margins,
Munson added, and she is lowering her gross margin assumptions to 54.4% from
55.5% for 2001, and to 53.8% from 55.2% for 2002. EMC shares recently traded
at $31.94, up 0.2%. (RS)
2:02 (Dow Jones) CBO, factoring in newly-enacted tax cut, now projects
fiscal 2001 surplus "in the vicinity of $200 billion if no further
legislation affecting revenues or spending is enacted this year." Fiscal
2000 surplus was $236 billion. (JC)
1:47 (Dow Jones) Stocks trying to scramble back, coming well off earlier
lows. Techs are still a wasteland, as is biotech space, with Nokia and
Affymetrix bruising each area. But aluminum is the worst-performing group on
the day, and Alcoa is the worst-performing stock in the Dow, off more than
5%. DJIA down 79 at 10842, Nasdaq off 40 at 2130, and S&P 500 falls 11 to
1242. As long as selloff continue on mediocre volume, things should be
contained, chart watchers say. (TG)
1:28 (Dow Jones) Shares of drug discovery tool companies such as Caliper
Technologies (CALP) and Nanogen (NGEN) fell Tuesday, dragged down by overall
weakness in the biotech sector. The most significant headline affecting the
makers of drug discovery tools came from Affymetrix (AFFX), which
significantly lowered estimates for the second quarter, citing slow sales.
AMEX Biotech ijdex off 4.1%. (EGS)
1:18 (Dow Jones) Harley-Davidson's (HDI) upcoming centennial celebration in
2003 highlights a very stable near-term demand outlook at both the consumer
and dealer levels, says Bear Stearns analyst Joseph Yurman. The analyst, who
has a buy rating on the stock, added that Harley's history of operating and
earnings consistency indicates a recession-resistant investment. Despite the
recent run up, Yurman says the stock could appreciate about 20% from current
levels. (DDO)
1:03 (Dow Jones) Solid climb in Sept bonds, notes reflect confidence in
market that "economy is weak and will stay weak for a while," Banc One
economist says. It also shows expectations that more rate cuts may be on the
way beyond June FOMC, he says. Sept bonds holding gains above 100-24 50-day
moving average. (SPC)
12:46 (Dow Jones) Federal Reserve Governor Edward Gramlich is offering a
repeat prepared text for his Tuesday night speech at New York University,
using the same remarks he presented for a speech at Georgetown University in
Washington. He'll discuss the possible end of outstanding Treasury debt and
alternative ways to invest government budget surpluses - he said Monday that
investment in foreign assets is his favorite option. (RSC)
12:34 (Dow Jones) Merrill Lynch won the competitive bid for the $1 billion
general obligation bond offering from the state of California. (RAB)
12:32 (Dow Jones) Blackstone Group has begun raising capital for a $4
billion LBO fund, though the New York firm may be targeting as much as $5
billion, according to people familiar with the matter. At a time when a
number of other marquee-named LBO firms have struggled to raise funds,
Blackstone likely won't have trouble rounding up capital because it didn't
stray much from its core investment strategy during the dot-com frenzy,
investors with the firm say. Through Dec. 31, 2000, Blackstone's first fund
produced a realized and unrealized net return of 20%, while its second fund
had a net return of 43%, according to the firm's offering document. Its
third fund, raised in 1997, produced a net return of 25%. (JAW)
12:20 (Dow Jones) Nokia's (NOK) second quarter profit and sales warning
Tuesday is the result of softening demand for replacement mobile handsets
and conservative network spending by wireless carriers, said JP Morgan H&Q
analyst Scott Chan. "In our opinion, capital expenditures in Europe have
slowed as carriers conserve cash for (third generation network) roll outs,
but this situation should be remedied in the long-term as quality of
networks suffer," Chan wrote in a Tuesday note. "However, we would not
expect to see a rebound in the infrastructure market until 2002." He said he
will likely be cutting 2001 and 2002 earnings per share estimates by about
20%. (JDB)
12:14 (Dow Jones) Biotechnology stocks plunged in early trading as investors
reacted to a 40-point drop in the Nasdaq Composite and a slew of bad news
reports from various companies, particularly Affymetrix (AFFX) and Praecis
Pharmaceuticals (PRCS). The Amex Biotech Index dropped more than 5%,
compared to a 2.4% drop in the Nasdaq Composite. Meanwhile, shares of
Affymetrix dropped 33% after the company lowered second quarter guidance,
while shares of Praecis also fell about 33% after the US Food and Drug
Administration annouced that data in its new drug application for a
prostrate cancer therapy was inadequate. (JJO)
12:03 (Dow Jones) Ehrenkrantz King Nussbaum chief strategist Barry Hyman
doesn't see big gains in major indexes until fundamentals at least begin to
stabilize. Financials haven't been acting well, and he says it's critical
any rallies contain both financials and techs as leading sectors. Technical
targets for month of June: DJIA 10500-10700; S&P 500 1200-1210; and Nasdaq
Composite 1850-1950. (TG)
11:50 (Dow Jones) As if we needed any more evidence, further signs from Bear
Stearns that things are a changin'. At the company's 12th Annual Technology
Conference in New York, analyst Andy Neff notes the firm handed out bags
last year to help reflect everyone's busy agenda. This year? Beach towels.
(DLF)
11:41 (Dow Jones) Hughes Electronics' (GMH) July options traded heavily
after the company cut revenue forecasts. But at least one institution has
stepped in and sold July 20 puts and used the proceeds to buy twice the
number of July 22.50 calls. With the stock falling $2.40 or 10.6% to $20.20,
the investor perhaps believes the stock has already taken its worst hit from
the news and might recover by mid-July, or remains willing to buy stock at
$20. At the CBOE, which captured the bulk of the trade, the July 22.50 calls
were down 95 cents to 75 cents on volume of 10,207 contracts, compared with
open interest of 313. The July 20 puts were at $1.10 on volume of 5004,
compared with open interest of 20. (KT)
(END) DOW JONES NEWS 06-12-01
02:27 PM
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