Market Wrapup--ino.com: "DJIA bounces on tame data, Nasdaq falls"
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>>>Aug. 2-MAR--
[B] US Equities Review: DJIA bounces on tame data, Nasdaq falls
--DJIA up 80; Nasdaq down 27; S&P 500 up 0.60
--Oil stocks rise; telecom, Internet stocks fall
By Rebecca Byrne, BridgeNews
New York--Aug. 2--The Dow Jones industrial average ended higher
Wednesday as investors cheered tame economic data, which was perceived as
diminishing the chances of another rate hike later this month. But the
Nasdaq Composite closed slightly lower amid concerns about valuations and
corporate earnings in the technology sector.
The Dow Jones industrial average closed up 80.58, or
0.76%, to 10,687.53 and the Nasdaq was down 27.06, or 0.73%, to 3658.46.
The S&P 500 was up 0.60, or 0.04%, to 1438.70.
* * *
"The economic news was good for some of the old economy stocks because
it shows that we can grow nicely with low inflation," said Jerry Klauer,
co-chairman of Gerard Klauer Mattison and Co.
Sales of new single-family U.S. homes plunged 3.7% in June to a
seasonally adjusted annual rate of 829,000 units, the lowest rate since
December 1997.
Sales were significantly below analysts' median expectation for an edging
down to 874,000 units.
Meanwhile, the Index of Leading Economic Indicators, designed to
forecast trends in the economy six to nine months in advance, came in
unchanged at 106.0 in June, largely in line with analysts' estimates.
The data added to the belief that the Fed would not raise interest
rates at its meeting Aug. 22. A BridgeNews poll conducted July 28 puts the
odds of a 25-basis-point rate hike at 48%.
On the Dow, Hewlett-Packard (HWP) was the biggest gainer, jumping 4
5/8, or 4%, to 112 1/2 after Bear Stearns raised its 2000 and 2001
earnings estimates on the company. IBM (IBM) and ExxonMobil (XOM) also
gave the blue-chip index a boost. Analysts raised their earnings estimates
on ExxonMobil Wednesday, citing large savings from its merger earlier this
year.
Oil stocks also received a boost from a jump in crude oil prices
following surprising data from the American Petroleum Institute. The API
reported that inventories of crude tumbled a whopping 9.002 million
barrels in the latest week, compared to expectations for an increase.
NYMEX crude oil ended up 44 cents to $28.23 per barrel.
Volume on the NYSE hit 987 million shares, with advances beating
declines by 1,598 to 1,272.
Despite posting gains earlier in the session, the Nasdaq backtracked
in the final hour of trade, amid weakness in a number of large-cap
technology names.
Dell Computer (DELL) slid almost 5% to 39 9/16 after USB Piper Jaffray
downgraded the stock to buy from strong buy, saying that the company is
unlikely to meet 30% revenue growth expectations on a sustainable basis. "Dell's numbers have caused some people to worry here," Klauer said.
Dell is slated to release earnings Aug. 10.
Meanwhile, JDS Uniphase (JDSU) fell 3%, Intel (INTC) lost 2% and Cisco
(CSCO), which is expected to report earnings Aug. 8, fell more than 3%.
American Power Conversion (APCC) led the Nasdaq 100 lower, falling 8% to
22 15/16 after sliding over 40% last week on the heels of a profit
warning.
"The rallies continue to be narrow and the sell-offs continue to be
broad," said Larry Rice, chief investment officer at Josephthal & Co.
Semiconductor and telecom stocks put in another disappointing
performance Wednesday, despite an earlier bounce. The PHLX Semiconductor
index fell 0.17% to 954 and the S&P wireless telecom index was down 1% to
768.
Still, shares of Motorola (MOT) jumped 5% to 36 13/16 after Bank of
America reiterated its strong buy rating on the stock following a
"surprisingly bullish" analyst meeting. Xilinx (XLNX) rose 6% to 75 5/16
after CS First Boston raised its revenue and earnings estimates on the
stock.
"There are some real pockets of strength today," said Art Hogan, chief
market analyst at Jefferies & Co. "But we'll continue to work sideways
until we find out what the Fed is going to do."
Volume on the Nasdaq hit 1.47 billion shares, with advances beating
declines by 2,059 to 1,923.
In the bond market, the 30-year Treasury was down 18/32, pushing its
yield up to 5.759%. Bonds headed lower on disappointment that the Treasury
didn't make the August 30-year issue its last bond sale.
CORPORATE NEWS
Gap Inc. (GPS) reported that it expects second-quarter earnings to be
about 2 to 3 cents below the First Call estimate of 23 cents per share.
The firm reported that same-store sales in July fell 1%. Shares fell 8% to
34.
Chiron Corp. (CHIR) posted a second-quarter profit of 30 cents per
share, beating First Call's 21-cent estimate. Shares rose 1/8 to 44 3/4.
Cigna Corp. (CI) reported a second-quarter profit of $1.71 per share,
above First Call's $1.56 estimate. Still, shares fell 4% to 96 9/16.
Global Crossing Ltd. (GBLX) posted a second-quarter loss, including
discontinued operations, of 62 cents per share. First Call was predicting
a loss of 61 cents. Shares rose 10% to 27 7/8.
Blockbuster Inc. (BBI) reported second-quarter earnings of 8 cents per
share, 2 cents ahead of analysts' estimates. Shares fell 8% to 11.
BIGGEST GAINERS
MascoTech Inc. (MSX) rose 39% to 16 after Heartland Industrial
Partners L.P., a private equity firm focused on industrial companies, said
it has agreed to buy the firm in a deal valued at more than $2 billion in
cash and debt.
Pegasus Solutions Inc. (PEGS) added 36% to 14 1/2 after posting a
second-quarter profit of 17 cents per share, beating the estimates by 9
cents.
Creo Products (CREO) rose 26% to 25 5/8 after reporting earnings of 28
cents a share, compared to a year-earlier profit of 16 cents a share. The
two analysts polled by First Call had estimated 28 cents a share for the
company.
BIGGEST LOSERS
Boykin Lodging Co. (BOY) fell 31% to 10 after saying it expects
results in the second half to be lower than expected. The firm's
second-quarter funds from operations of 76 cents per share met analysts'
estimates.
Plug Power (PLUG) fell 23% to 39 1/2 after it posted a second-quarter
loss of 42 cents per share, wider than First Call's estimated 35-cent loss.<<< |
