MARKET SNAPSHOT
Nasdaq in powerful advance
Dow ekes out a gain
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 5:05 PM ET Jul 14, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) -- Technology issues rose for the third straight session Friday, as investors remained enamored with Internet and semiconductor stocks, while the broader market was aided by buying in financial shares.
A benign wholesale inflation report provided the market with a positive backdrop, as did a number of positive earnings reports. The tame economic news was particularly beneficial to financial shares -- which were the upside leaders within the Dow Industrials.
"We're seeing strong earnings and finally a positive reaction to good news. The momentum players are coming back into the market," remarked Barry Hyman, senior market strategist with Ehrenkrantz King Nussbaum.
Inside the market, Internet, chip and networking stocks paced the tech sector's advance. The broader market saw gains in shares of bank, brokerage and airline issues while drug stocks remained on a downward trajectory. Also lower were paper, chemical, and utility shares.
The Dow Jones Industrial Average ended up 24.04 points, or 0.2 percent, to 10,812.75 after meandering close to the unchanged mark throughout the session.
"Many safe haven areas of the market, such as healthcare and consumer stocks, are [coming under pressure] and cash is being redeployed in the tech and telecom sectors," said Brian Slater, portfolio manager at Condor Capital Management.
Among shares reaching fresh 52-week highs Friday were Intel, Altera, Bear Stearns, Merrill Lynch and Micron Technology.
The Dow's upside leaders included J.P. Morgan, American Express, Citigroup, Eastman Kodak and Procter & Gamble while Merck, Johnson & Johnson, DuPont and 3M were among the downside movers.
The Nasdaq Composite climbed 71.32 points, or 1.7 percent, to 4,246.18, closing above the 4,200 level for the first time since April 7. The Nasdaq 100 Index piled on 84.48 points, or 2.1 percent, to 4,041.15 -- climbing above the 4,000 level for the first time since April 11.
Though the market seems to have reverted back to its old ways, with money moving out of the drug sector and into tech shares, investors are being a lot more selective, noted John Zaro, managing member at Bourgeon Capital Management.
"People aren't just throwing darts at the group. The buying is more differentiated [compared to earlier in the year]. The money is flowing into names that are putting out the good numbers," Zaro continued.
Some of the traditional market leaders, such as EMC and Cisco Systems, are turning up again, Zaro said. "The question is: Will the conviction last?" he asked.
The Standard & Poor's 500 Index gained 0.9 percent while the Russell 2000 Index of small-capitalization stocks lost 0.13 point.
Separately, a jury ruled that the tobacco industry shell out about $145 billion to sick Florida smokers - the largest punitive award in U.S. history. Dow-component Philip Morris (MO: news, msgs) must pay $73.96 billion to plaintiffs while R.J. Reynolds (RJR: news, msgs) was ordered to pay about $36.28 billion. See full story.
Philip Morris shares fell 3/16 to 24 11/16 while R.J. Reynolds lost 15/16 to 26 3/16.
Volume stood at 951 million on the NYSE and at 1.66 billion on the Nasdaq Stock Market. Winners beat losers by 16 to 13 on the NYSE and by 22 to 18 on the Nasdaq.
In other news, equity funds had inflows of $1.1 billion in week ended Wednesday compared with inflows of $7.5 billion during the prior week, Trim Tabs said.
Equity funds that invest primarily in U.S. stocks had inflows of
$1.1 billion compared with inflows of $6.6 billion during the prior
week.
Inside PPI, retail sales
The June producer price index rose by an as-expected 0.6 percent while the closely watched core rate, which excludes food and energy components, slipped by 0.1 percent compared to expectations for a 0.1 percent increase. See full story.
"The core PPI number was well-behaved. There's really no evidence of pipeline inflation or broadening price pressures here," said Peter Kretzmer, senior economist at Banc of America Securities. But oil prices will continue to put upward pressure on the headline numbers for the next months, he added.
In the meantime, consumer spending remained healthy in June, with retail sales climbing 0.5 percent compared to expectations for a 0.3 percent increase. Excluding autos, retail sales rose 0.2 percent, less than the expected 0.3 percent increase. And May retail sales were upwardly revised to show a 0.3 percent rise from the previously reported 0.3 percent decline. Read the story.
"The consumer spending numbers were modestly bearish. The degree of the slowdown in the second quarter was a little milder than previously expected," Kretzmer said.
For the Fed, this has to raise some doubts as to whether a slowdown has taken hold in a material way, Kretzmer concluded.
In other economic news, June industrial production rose 0.2 percent compared to the expected 0.3 percent increase while capacity utilization came in at 82.1 percent, as expected. See story and view Economic Preview, economic calendar and forecasts and historical economic data.
Sector movers
Internet stocks again saw lofty gains Friday, with the Goldman Scahs internet Index ($GIN: news, msgs) up 6.0 percent. The index is up 13.9 percent on the week.
Among the big winners were EBay (EBAY: news, msgs), up 7 3/4 to 61 3/16, after CS First Boston analyst Heath Berry initiated coverage with a "buy" rating and a price target of $72. And Amazon (AMZN: news, msgs) flew 7 1/2 to 42 1/2 on positive comments from Salomon Smith Barney. See Net Stocks.
The B2B (BHH: news, msgs)arena was also red hot this week, and Friday was no exception. Merrill Lynchs' B2B Holdrs added 4.1 percent, led by Commerce One, up 10 to 69 15/16, and Scient, up 35 percent, or 18 9/16 to 71 1/2.
Meanwhile, the chip sector lifted on the heels of Altera's better-than-expected earnings news, which reached a fresh 52-week high. The Philadelphia Semiconductor Index ($SOX: news, msgs) rose 2.8 percent.
Altera put on 13 15/16, or about 13 percent, to 125. After the close Thursday, Altera (ALTR: news, msgs) posted second-quarter earnings of 49 cents a share, surpassing the First Call estimate of 44 cents a share. The company also declared a 2-for-1 stock split. See full story. A number of brokerages -- Lehman Brothers, CS First Boston and Chase H&Q -- raised their price targets on the stock. See Rating Revisions.
Among the other winners in the chip sector were Intel (INTC: news, msgs), which climbed 2 13/16 to 146 and set a new 52-week high of 146 5/16. And Rambus (RMBS: news, msgs) rose 11 percent, or 10 1/4 to 104 3/4.
But PMC-Sierra lost 7 3/4 to 221 3/16. Late Thursday, the company (PMCS: news, msgs) checked in with a second-quarter profit of 23 cents a share compared to the First Call estimate of 19 cents a share and 9 cents a share in the year-ago period. CS First Boston raised its price target on the stock to $300 from $250.
And Vitesse Semiconductor (VTSS: news, msgs) said after the close Thursday that it made 17 cents in its third quarter, matching the First Call estimate. The company earned 8 cents a share in the same period last year. The stock dropped 9 3/8 to 77 5/16. Read the story. CS First Boston reiterated its "buy" recommendation on the stock, calling the company's quarter "good but not good enough." Dain Rauscher raised its price target on the stock to $110 from $90.
In the computer hardware arena, Gateway lost 2 1/8 to 68 3/8. The Goldman Sachs Computer Hardware Index ($GHA: news, msgs) added 0.2 percent.
The company (GTW: news, msgs) reported second-quarter earnings of 37 cents after the close of trading Friday, which compared to the First Call estimate of 36 cents a share and 28 cents in the year-ago quarter. See story. Banc of America Securities lowered its rating on the stock to a buy" from a "strong buy," citing the stock's 25 percent run-up ahead of the earnings results. See full story.
Drug stocks had another losing day, with the Amex Pharmaceutical Index ($DRG: news, msgs) off 1.8 percent. The index is off 5.3 percent on the week after rising 8.2 percent in June. Merck (MRK: news, msgs) was again one of the Dow's downside leaders after announcing late Thursday that an advisory committee of the FDA has recommended against the approval of an over-the-counter version of its cholesterol-lowering drug, Mevacor. See Market Pulse. The stock fell 1 13/16 to 67 5/16.
Also lower were shares of Dow-component Johnson & Johnson (JNJ: news, msgs), which fell 3 3/4 to 91 1/2, and Eli Lilly (LLY: news, msgs), down 1 3/8 to 94 3/8 after Banc of America lowered the stock to a "market performer" from a "strong buy."
Financial stocks picked up steam, led by bank shares. The CBOE Bank Index ($BIX: news, msgs) added 2.4 percent while the Amex Securities Broker/Dealer Index ($XBD: news, msgs) rose 1.4 percent.
J.P. Morgan extended gains on the heels of Thursday's better-than-expected earnings news, rising 3 7/8 to 128. On Friday, the Dow-component (JPM: news, msgs) saw its rating upped to a "near-term buy" from a "near-term accumulate" by Merrill Lynch while CIBC World Markets upgraded the stock to a "buy" from a "hold."
The Dow's other financial components also gained significant ground, with Citigroup (C: news, msgs) up 1 to 67 5/8 and American Express (AXP: news, msgs) up 1 1/2 to 56 9/16.
Treasury focus
Bond markets slipped -- with short issues again lagging the long end of the curve -- after posting short-lived gains immediately after the morning's dose of economic news was released.
Kretzmer believes Friday's economic data will cause the front end of the Treasury curve to price in a slightly higher chance of a 25-basis-point tightening at the August 22 FOMC meeting.
The 10-year Treasury note shed 18/32 to yield 6.08 percent while the 30-year bond lost 20/32 to yield 5.87 percent. See Bond Report.
In the currency arena, dollar/yen edged down 0.1 percent to 107.91 while euro/dollar fell for the fourth consecutive session, losing 0.1 percent to 0.9365. See latest currency rates.
In the commodity market, August crude lost 15 cents to $31.32 while the Bridge CRB index dropped 2.37 to 220.23. There's continued uncertainty as to whether OPEC will hold a special meeting next Tuesday to discuss Saudi Arabia's plans to hike its crude output. See related story.
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Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
