<font color=BLUE>MARKET SNAPSHOT--Keeping the range
Averages tread water, buyers undecided
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 1:26 PM ET Aug 25, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - The major averages meandered within a razor-thin range Friday as investors displayed a lack of enthusiasm in a session devoid of news to drive prices.
Still, recent action has been labeled as extremely encouraging by market pundits.
"We're seeing a slow drift higher. Many people have been frustrated by the current lack of volatility," said Mike Sheldon, chief market strategist at Spencer Clarke.
"I don't think we'll see an explosive move higher but I'm encouraged by the recent action. Market breadth is improving and some industry groups that have been lagging are doing better," Sheldon added.
Within technology, networking and some computer stocks eked out gains as chip shares came under some profit taking. The broad market saw a slip in oil service, utility and financial stocks while biotech, drug and paper issues attracted buyers.
The Dow Jones Industrials Average ($DJ: news, msgs) gained 20 points, or 0.2 percent, to 11,202.
The Dow's leaders Friday included IBM, Eastman Kodak, 3M, and American Express. Moving lower were shares of Coca-Cola, General Motors, Intel and Procter & Gamble.
Coca-Cola (KO: news, msgs) was the blue-chip barometer's downside mover, shaving 3.6 percent, or 2 1/16 to 55 7/8. Salomon Smith Barney lowered its second-half volume estimates and cut its 2001 volume growth to 5 percent to 5.5 percent but maintained its $68 12-month price target.
The Nasdaq Composite ($COMPQ: news, msgs) edged up 1 point to 4,055 while the Nasdaq 100 Index ($NDX: news, msgs) hugged the flat line.
Peter Cardillo, chief strategist at Westfalia Securities, believes the market is setting itself up for a breakout from its current trading range. The major averages have made steady progress -- with the Dow close to the 11,200 level and the Nasdaq above 4,000, he said.
"Next week we're likely to spend more time consolidating around these levels and get leadership as the new month begins. Right now we're not seeing leadership, just lots of focus on the news of individual stocks," Cardillo said.
But one market watcher isn't convinced the recent rally - with four straight sessions of advances for both the Dow and the Nasdaq -- has enough stamina to keep going in the near-term.
"The recent rally has non-confirmations all over the place. That means it will be somewhat easier for the bears to reverse the market soon. Another thing bears have going for them is the unbelievable overconfidence bulls have at this time," said Tom Peterson, publisher of the newsletter Bull's Eye Research.
"Bears have a lot in their favor right now," he concluded.
The Standard & Poor's 500 Index ($SPX: news, msgs) inched up 0.1 percent while the Russell 2000 Index ($RUT: news, msgs) of small-capitalization stocks gained 0.2 percent.
Volume came in at 421 million on the NYSE and at 803 million on the Nasdaq Stock Market. Breadth was mixed, with losers matching winners on the NYSE while advancers beat decliners by 19 to 17 on the Nasdaq.
Separately, Trim Tabs reported that equities had inflows of $5.6 billion in the week ended Aug. 23 versus inflows of $600 million in the previous week. Equity funds investing primarily in U.S. stocks saw inflows of $5.6 billion vs. inflows of $1.1 billion in the previous week, Trim Tabs said.
Listen to midday market report.
Specific movers
In earnings news, Sycamore Networks (SCMR: news, msgs) posted late Thursday fourth-quarter earnings of 8 cents a share, surpassing the First Call estimate by 2 cents. The maker of optical networking products generated revenue of $90.4 million compared to $59.2 million in the year-ago quarter. The stock slipped 5 1/2 to 152 1/2. It's part of Merrill Lynch's Internet Architecture Holdrs (IAH: news, msgs), which shed 0.5 percent.
Analysts praised Sycamore's results.
CS First Boston said in a research note that Sycamore will continue to emerge as a leading player in optical systems and that recent share appreciation could create immediate-term profit taking. It maintains a "buy" rating on the stock. Lehman Brothers reiterated its "buy" rating on the stock and $200 year-end price target, saying it believes the stock offers an attractive investment opportunity. Donaldson, Lufkin & Jenrette raised its 12-month price target on the company to $180 and reiterated its "buy" rating, indicating that strong revenue momentum and a diversifying customer base makes them more optimistic about the company's future.
Shares of SDL slipped 4 5/8 to 407 1/4. Antitrust regulators asked JDS Uniphase (JDSU: news, msgs) and SDL (SDLI: news, msgs) to provide more information on their proposed $44 billion merger, which was announced on July 10 and is expected to be completed in the fourth quarter. Both companies said they intend to fully respond to the request by the Justice Department antitrust division. See full story. CS First Boston said in a research note that they continue to believe the merger will ultimately be approved by the DOJ given the increasing competition from start-ups. First Boston said a fourth-quarter completion date for the fourth quarter is reasonable. JDS added 3/8 to 125 1/2. Both stocks are components of Merrill's Broadband Holdrs (BDH: news, msgs), up 0.3 percent.
Another stock in the news Friday was Emluex (EMLX: news, msgs), which plummeted 60 percent to 45 before being halted. A false press release stated that the networking-gear maker would slash its earnings estimates and that the company's Chief Executive Paul Folino would resign. The fake release claimed the Securities and Exchange Commission would investigate the company's accounting practices. The SEC declined to comment. Read the full story.
Treasury and currency focus
Treasury prices traded mixed, with the 10-year Treasury note up 1/32 to yield ($TNX: news, msgs) 5.715 percent and the 30-year bond down 1/8 to yield ($TYX: news, msgs) 5.665 percent. See Bond Report.
On the economic front, second-quarter gross domestic product was upwardly revised to show a growth rate of 5.3 percent from the previously reported 5.2 percent. See full story and view Economic Preview, economic calendar and forecasts and historical economic data.
In other news, July existing home sales fell 9.8 percent to a 4.79 million rate, less than the expected 5.13 million rate. See full story.
Additionally, Alan Greenspan is addressing the topic of global economic integration from a Fed conference in Jackson Hole, Wyoming Friday morning. The Fed chief did not directly address the markets in his speech. He said it's inevitable productivity will taper off but added that it's hard to find evidence that the productivity growth rate is slowing just yet. Read the full story.
The Fed cited rapid gains in productivity as the key factor behind its decision to leaves rates steady at this week's FOMC meeting. Productivity has been the linchpin behind the decade-long U.S. expansion and has been crucial in holding down wage inflation in the presence of a taut labor market.
In the currency arena, dollar/yen (C_JPY: news, msgs) added 0.2 percent to 107.16 while euro/dollar (C_EUR: news, msgs) edged up 0.2 percent to 0.9034.
Tokyo consumer prices slipped by a larger-than-expected 1.3 percent in August from the year-ago period -- the 12th straight month of declines. The numbers raise concerns over whether deflationary forces have truly dissipated from the Japanese economy. The Bank of Japan nudged up short-term rates in August interest rates on ground that deflation was no longer a threat.
Taichi Sakaiya, head of Japan's Economic Planning Agency, called the decline quite larger and that consumer prices need to be monitored.
"This report unambiguously contradicts the BOJ's assertion that deflation risks have passed. Based on these latest price figures, you should not expect any more rate hikes soon," said Carl Weinberg of High Frequency Economics.
In the commodity arena, October crude added 17 cents to $31.80 and the Bridge/CRB index tacked on 1.26 to 222.41. See full story.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
