MARKET SNAPSHOT
Most sectors deep in the red
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 1:22 PM ET Jun 29, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) -- The major averages wilted Thursday, led by big-cap technology names, as a slew of earnings warnings cast a cloud over the market. Cyclical issues also fumbled, keeping the Dow Industrials deep in the minus column.
Profit-takers also emerged following a run-up in technology stocks on Wednesday -- the same day the Federal Reserve opted, as has been widely expected, to leave short-term rates unchanged.
"In this kind of environment, it seems that you buy the rumor and sell the fact," said Mike Vogelzang, president and chief investment officer at Boston Advisors.
"There are a lot of big potholes in this market and concerns about earnings have been the driving force," Vogelzang added.
Most market sectors were dripping in red ink, with the exception of oil service shares and the defensive drug and utility sectors. Areas that saw the most momentum as the market advanced -- such as chip, biotech and computer -- not surprisingly came under the most selling pressure Thursday.
The Dow Jones Industrial Average shaved 105 points, or 1.0 percent, to 10,421 at 1:19 p.m.
Leading the market on the downside were shares of Caterpillar, DuPont, 3M, IBM, Wal-Mart and United Technologies. Among the few upside movers were Boeing, Philip Morris and Walt Disney.
The Nasdaq Composite erased 60 points, or 1.5 percent, to 3,879 while the Nasdaq 100 Index dropped 90 points, or 2.4 percent, to 3,680.
Among the big-cap tech names under the gun were Cisco Systems (CSCO: news, msgs), off 2 to 61 9/16, Sun Microsystems (SUNW: news, msgs), down 2 7/16 to 87 3/4, Oracle (ORCL: news, msgs), down 2 15/16 to 80, and IBM (IBM: news, msgs), off 3 11/32 to 110 7/16.
The Standard & Poor's 500 Index trimmed 0.8 percent while the Russell 2000 Index of small-capitalization stocks lost 1.3 percent.
Volume came in at 607 million on the NYSE and at 886 million on the Nasdaq Stock Market. Breadth was negative, with decliners beating advancers by 15 to 13 on the NYSE and by 22 to 16 on the Nasdaq.
Sector and individual movers
Shares of Ericsson (ERICY: news, msgs) and Nokia (NOK: news, msgs) took a hit in after Ericsson?s president Kurt Hellstrom warned that growth in the mobile phone market could slow due to higher-than-expected costs operators are paying for third generation cell-phone licenses. See full story. Ericsson fell 1 to 19 1/16 while Nokia trimmed 2 5/16 to 48 1/16. And Motorola (MOT: news, msgs) shaved 1/8 to 30.
Qualcomm (QCOM: news, msgs) fell 2 1/8 to 61 5/8. PaineWebber lowered its 2000 earnings-per-share estimate to $2.33 from $2.39 and sliced its price target to $40 from $48. See Rating Revisions.
Eli Lilly (LLY: news, msgs) jumped 16.5 percent, or 14 93.256 to 101 9/16, after the company said its treatment for sepsis has met research goals. The climb buttressed the drug sector, which was among the sole winners Thursday. The Amex Pharmaceutical Index ($DRG: news, msgs) rose 1.5 percent. Another upside mover included Merck (MRK: news, msgs), up 3/16 to 74 3/16. Donaldson, Lufkin & Jenrette upped its price target on Merck to $90 from $85.
The market waded through more earnings warnings Thursday.
Unisys announced that it?s expecting second-quarter earnings of 18 to 20 cents a share compared to the First Call estimate of 37 cents due to weakness in its federal government and financial services business. The stock (UIS: news, msgs) fell 4 1/8, or 22 percent, to 18. View full story.
And Goodyear Tire & Rubber (GT: news, msgs) sees second-quarter earnings about level with year-ago levels of 37 cents a share. First Call expected the company to earn 58 cents a share in the quarter. The company blamed the earnings shortfall to an increasingly competitive environment, a weak Euro and increased raw material and energy costs. Read the story. Shares shaved 197/256 to 22 9/16.
SCM Microsystems announced that second-quarter results will fall short of expectations due to slower sales. The company (SCMM: news, msgs) expects to earn 7 to 11 cents a share in the quarter, including one-time items, well below the First Call estimate of 22 cents a share. The stock tumbled 37 percent, or 33 11/16 to 55 5/8.
Shares of Palm added 2 1/8, or 7.8 percent, to 28 1/2. Late Wednesday, the company (PALM: news, msgs) posted a fourth-quarter profit of 3 cents a share -- which excludes separation charges related to its spinoff from 3Com -- ahead of the First Call expectation of 1 cent a share. The company made a penny a share in the year-ago period. See story. Shares of 3Com (COMS: news, msgs) added 2 to 50 1/8.
EarthLink stock (ELNK: news, msgs) added 3/8 to 15 3/16. The company said Hewlett-Packard plans to feature EarthLink?s Web service on a line of home PCs. See full story.
ConAgra (CAG: news, msgs) saw its shares slip 5/64. The food company reported Thursday a fourth-quarter profit from operations of 46 cents a share, matching the First Call estimate. It made 41 cents in the year-ago period. Read the story
Shares of Del Monte (DLM: news, msgs) fell 1 3/16, or about 14 percent, to 7 3/16. Late Wednesday, Del Monte warned that fourth-quarter earnings were expected to come in between 20 to 24 cents a share - well short of the First Call estimate of 30 cents a share. Goldman Sachs lowered its rating on the company to a ?market performer? from its recommended list.
Treasury focus
Government prices posted heavy gains, with the 10- and 30-year issues leading on the way up, as a sell-off in equities as well as month-end buying sparked interest in fixed-income.
Separately, the government purchased $2 billion in bonds Thursday in its eighth such operation to date. The buyback drew offers totaling $7.02 billion. Treasury paid $2.48 billion to buy back $2 billion in par amount of 30-year bonds maturing between Feb. 2019 and Aug. 2023.
The 10-year Treasury note jumped 15/32 to yield 6.035 percent while the 30-year bond skyrocketed 30/32 to yield 5.90 percent. See Bond Report.
On the economic front, Thursday saw the release of the final revision to first-quarter gross domestic product, which was upwardly revised to 5.5 percent from 5.4 percent. The implicit price deflator was revised to 3.0 percent from the previously reported 2.7 percent. See full story.
And weekly initial claims rose 2,000 to 306,000. May new home sales lost 0.2 percent to 875,000, less than the expected 914,000. View Economic Preview, economic calendar and forecasts and historical economic data.
In the currency market, dollar/yen fell 0.4 percent and was recently trading at 105.06 while euro/dollar jumped 0.9 percent to 0.9499. See latest currency rates.
Fitch announced a downgrade of Japan?s long-term local currency rating to ?AA+? from ?AAA? Thursday due to concerns over the health of the country?s public finances.
The yen didn?t weaken on the Fitch news as market participants reflected on interest-rate issues. In fact, Japan has been signaling that it will soon end its zero interest-rate policy, in place since February 1999, perhaps as soon a mid-July. This has been a source of support for the yen.
Further, speculation of a downgrade had surfaced earlier in the week, causing yen selling on Monday.
In the commodity arena, August crude gained 44 cents to $32.34 while the Bridge CRB index added 0.82 to 225.84.
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Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
