<font color=BLUE>MARKET SNAPSHOT--Dow, Nasdaq take separate paths
New home sales jump 14.7%
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 12:53 PM ET Aug 29, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - It was a mixed bag for the equity market Tuesday as investors digested the morning's spate of economic news, which revealed surprising strength in the housing sector.
The tech group benefited from buying interest in the computer hardware and networking sectors, which pushed the Nasdaq to higher ground. In the broader market, the brokerage group saw the best buying interest, hoisted by talk that Donaldson, Lufkin & Jenrette (DLJ: news, msgs) was an acquisition target. Also trading higher were oil and biotech shares while airline, bank, paper and utility shares slipped.
Volume is expected to remain light throughout the week with little in the way of news to chew on. In fact, the second-quarter earnings season is just about wrapped up and the start of the third-quarter earnings pre-announcement period is still about two weeks away.
"Now we approach the cruelest month of the year -- September -- which has been on average the only down month of the twelve during the past 60 years," noted Robert Dickey, chief technical strategist at Dain Rauscher Wessels.
"A possible reason for September-October pullbacks is that fears about third-quarter earnings cause investors to be more defensive at this time of the year. Earnings warnings from some key companies combined with a weak follow-through after the positive first- and second-quarter reporting periods have raised the concern over the third-quarter reports coming up," Dickey said.
The Dow Jones Industrials Average ($DJ: news, msgs) lost 48 points, or 0.4 percent, to 11,204 at 11:09 a.m.
The blue-chip barometer's biggest downside movers included Philip Morris, Citigroup, Alcoa and General Motors. The Dow's frontrunners included Caterpillar, AT&T and IBM. The latter (IBM: news, msgs), up 1 15/16 to 133 7/16, has risen for five straight trading sessions and is up about 18.4 percent for the month.
Intel (INTC: news, msgs) added 1/2 to 74 3/8. The chip kingpin said late Monday it found a defect in its Pentium III processor running at 1.13 gigahertz, which began shipping July 31. An Intel spokesman said the company has shipped a very small number of the processors and defined the problem "immaterial" to its quarterly revenue numbers.
AT&T shares rose 1 to 31 1/4. AT&T said late Monday that it's gaining control of high-speed cable partner ExciteAtHome (ATHM: news, msgs). From Sept. 1, ExciteAtHome's results will be included in AT&T's financial statements. Because of that, AT&T reduced its earnings estimates for the third-quarter by 5 cents a share and slimmed its first- and second-quarter earnings by five cents a share. And Ma Bell's fiscal 2000 profit is expected to be 1 to 2 cents less compared to previous estimates.
The Nasdaq Composite ($COMPQ: news, msgs) added 5 points, or 0.1 percent, to 4,075 while the Nasdaq 100 Index ($NDX: news, msgs) shed 3 points, or 0.1 percent, to 3,951.
The Standard & Poor's 500 Index ($SPX: news, msgs) inched down 0.2 percent while the Russell 2000 Index ($RUT: news, msgs) of small-capitalization stocks gained 0.1 percent.
Volume came in at 256 million on the NYSE and at 514 million on the Nasdaq Stock Market. Breadth was mixed, with losers outpacing winners by 14 to 10 on the NYSE and advancers matching decliners on the Nasdaq.
Treasury focus
Treasury prices slipped, slightly disturbed by the unexpected strength in the housing market.
The 10-year Treasury note shed 6/32 to yield ($TNX: news, msgs) 5.80 percent and the 30-year bond was off 12/32 to yield ($TYX: news, msgs) 5.745 percent. See Bond Report.
Over on the economic docket, Tuesday saw the release of August consumer confidence, which came in at 141.1, a touch lower than expectations for a 141.7 reading and less than the July reading of 143.0. See full story.
July new home sales, meanwhile, climbed a whopping 14.7 percent to 944,000, much higher than the 826,000 expected by a survey of economists conducted by CBS MarketWatch.com. Read the full story.
The climb was the largest in seven years and unsettled market participants, as it suggests six Fed rate hikes since June 199 have yet to take a meaningful bite out of the housing market. View Economic Preview, economic calendar and forecasts and historical economic data.
"With mortgage rates coming down in July, new home sales soared," observed Joel Naroff, chief U.S. economist at Naroff Economic Advisors.
"When the housing market began to weaken, it was viewed as a signal that the economy was beginning to slow. That might have been the case in the spring, but it is not the situation anymore," Naroff continued. "With mortgage rates below 8 percent and consumer confidence hanging in at near record levels, home sales should remain robust."
"The [home sales] number comes completely out of the blue -- there has been nothing in the anecdotal or survey evidence even hinting at such a massive rebound," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
While the new home sales series is among the most volatile of economic indicators, Shepherdson said the figures will come as a shock to the markets, which are firmly in soft landing mode.
"Sales will likely drop back next month, but it is now clear
to all that housing is not a spent force," he concluded.
In the currency arena, dollar/yen (C_JPY: news, msgs) was flat at 106.45 while euro/dollar (C_EUR: news, msgs) slipped 0.4 percent to 0.8960.
In the commodity arena, October crude dropped 27 cents to $32.60 and the Bridge/CRB index added 0.42 to 224.33. |
