Dow clings to modest gains
Nasdaq wilts as National Semi plunge hurts chips
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 2:55 PM ET Oct 24, 2000
NEW YORK (CBS.MW) - The Dow Industrials lost a good deal of its luster as the session progressed but a climb in financial and paper stocks helped the blue-chip barometer stay in the black. International Paper, up about 8 percent, was the biggest contributor to the Dow's advance.
An initial climb in tech stocks fizzled, however, and the Nasdaq slipped into the minus column in afternoon dealings. A profit warning from National Semiconductor dealt a blow to the semis, which had managed a rally for three straight sessions. Further, a downgrade of Texas Instruments by Banc of America Securities sapped enthusiasm from the market. Also dragged lower were networking and computer hardware issues.
The broad market saw respectable gains in a slew of sectors. The frontrunners included chemical, financial, paper, consumer and retail issues. But the market's "safe-haven" areas -- like drug and utility stocks - wilted. Oil and oil service sharers also sagged even after Texaco, Chevron and Exxon Mobil all checked in with better-than-expected results.
"The market needs to base out over the next few weeks. That would be an excellent sign," said Louis Parks, senior managing director at Raymond James. Sideways action, in fact, will allow the market to heal its recent wounds and provide a launching pad for future advances, he added.
The Dow Jones Industrials Average ($DJ) added 32 points, or 0.3 percent, to 10,305 after rising as much as 168 points in intra-day dealings.
Dow-component Exxon Mobil (XOM) posted a third-quarter profit from operations of $1.22 a share, ahead of the First Call estimate of $1.16 and the 62 cents a share earned in the same period last year. The stock shed 31 cents to $88.75.
The blue-chip barometer's winners included DuPont, International Paper, General Electric, Honeywell and J.P. Morgan. In the red were shares of Intel, Hewlett-Packard, IBM and Exxon Mobil.
Sector rotation and changes in leadership have been this year's hallmarks.
"The market can move higher without the benefit of past leaders as long as some other area takes over the leadership role. The tech stars of a year ago have been replaced by the healthcare sector as the most bullish and the biotechs leading the higher growth area of that sector. Also bullish are the energy stocks," said Robert Dickey, chief technical strategist at Dain Raucher Wessels.
"Tech stocks are bouncing to some degree, but the sector cannot be called bullish until it has gone through a likely longer bottoming period. Put it all together and you have the makings for a market rally through year-end, although the colors on your screen will be different than the last time," Dickey added.
The Nasdaq Composite ($COMPQ) erased 52 points, or 1.5 percent, to 3,416 while the Nasdaq 100 Index gave up 76 points, or 2.2 percent, to 3,345.
The Standard & Poor's 500 Index ($SPX) lost 0.4 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks shaved 0.3 percent.
Volume checked in at 907 million on the NYSE and at 1.46 billion on the Nasdaq Stock Market. Market breadth turned mixed, with advancers beating out decliners by 14 to 13 on the NYSE while losers bested winners by 21 to 18 on the Nasdaq.
Sector movers
Chip stocks were the only downside movers in eth tech arena Tuesday as the Philadelphia Semiconductor Index ($SOX) dropped by 7.2 percent after registering healthy gains during the previous three trading sessions.
The culprit was National Semiconductor (NSM), which announced late Monday that second- and third-quarter sales and earnings may come in below the first quarter's levels. First Call had expected earnings-per-share of 77 cents for the second quarter and 79 cents for the third quarter. The drop in revenue -- blamed on inventory corrections among some of National Semi's mobile phone customers -- is expected to adversely affect margins, the company said. The stock, which is a component of the Philly Semiconductor Index, plunged $12.81, or 34.7 percent, to $24.13. It was hit by downgrades from Banc of America Securities, Gruntal & Co. and J.P. Morgan.
Also weighing on sentiment was news semiconductor equipment bookings for September slipped from the August level and that the book-to-bill ratio also declined, according to the Semiconductor Equipment and Materials International.
In the meantime, Banc of America Securities cut its rating on Texas Instruments (TXN) to a "buy" from a "strong buy." The brokerage cited reduced earnings visibility for Texas Instruments from the cell phone inventory adjustment that is also impacting National Semi. TI lost 5 percent to $46.44.
Losers in the chip segment included Advanced Micro Devices (AMD), off 5.7 percent to $20.63, and bellwether Intel (INTC), down 44 cents to $42.88. LSI Logic (LSI), meanwhile, fell 9.6 percent to $29 ahead of the company's third-quarter earnings release, due out after the close. First Call expects earnings-per-share of 32 cents.
Telecom stocks improved, with gains spawned by better-than-expected results from Qwest Communications. The company (Q) posted a profit of 14 cents a share in the third quarter, well ahead of the nine cents a share expected by First Call. Shares put on 6.2 percent to $48.19. Merrill Lynch's Telecom Holdrs (TTH), a basket of 20 stocks in the sector, gained 1.5 percent. But shares of Dow-company AT&T (T) slipped 31 cents to $27.31 following news that the board of AT&T is reportedly set to announce as early as Tuesday a plan to break itself up into four parts in an effort to lift its sagging shares.
Financial issues remained the biggest gainers on the day though brokerage shares came off their best levels for the session due to selling pressure among the online outfits. The Amex Securities Broker/Dealer Index ($XBD) edged up 0.2 percent while the S&P Bank Index ($BIX) rose 2.3 percent. The Dow's financial components - American Express, Citigroup and J.P. Morgan - registered sharp gains and kept the index firmly in the plus column. But Ameritrade's (AMTD) quarterly results failed to inspire and the stock shed $1 to $14.50. The online broker registered net income of $286,000 in its fourth quarter -- break-even on a per-share basis. First Call had been expecting a loss of three cents a share. Among the other online brokerages, E-Trade (EGRP) lost 75 cents to $14.50 while TD Waterhouse (TWE) gained 31 cents to $16.88.
Drug stocks, which have seen stellar gains this year as investors seeking safety from the tech turmoil poured money into the sector, lost some ground Tuesday after two straight days of gains. The Amex Pharmaceutical Index ($DRG) slipped 1.2 percent.
Among the drug companies reporting, Pfizer checked in with a third-quarter profit from operations of 27 cents a share, two cents ahead of the First Call estimate. The company earned 21 cents in the year-ago period. Shares (PFE) fell $2.50 to $42.88. Sales of Lipitor increased 22 percent to $1.22 billion during the quarter. But some analysts were looking for as much as 35-percent growth in the drug's sales.
And Schering-Plough (SGP) registered a third-quarter profit of 40 cents a share, in line with the First Call consensus estimate and ahead of the 35 cents earned in the year-ago quarter. The stock rose 75 cents to $53.75.
Specific movers
Lucent Technologies (LU) registered after the close Monday fourth-quarter earnings of 18 cents a share, in line with reduced First Call estimates. The company made 24 cents in the year-ago period. Lucent also reiterated that first-quarter 2001 results will miss previous targets. The stock added 63 cents to $22.69.
Xerox (XRX) checked in with a third-quarter loss of 20 cents per share versus lowered Wall Street expectations of a loss of 19 cents a share. The company made 47 cents in the year-ago quarter. Xerox also revealed cost-cutting measures and asset sales expected to produce up to $4 billion. The stock fell 4.1 percent to $8.75 in recent trading.
Treasury focus
Government prices remained deep in negative territory, with the 30-yaer bond shedding close to a full point, as stability in the stock market interrupted the safe haven flows that poured into the fixed-income arena over the past week or so.
The 10-year Treasury note slipped 10/32 to yield ($TNX) 5.63 percent while the 30-year bond erased 25/32 to yield ($TYX) 5.735 percent.
No data is due out for Tuesday. The week's capstone - the third-quarter employment cost index -- will hit the tape on Thursday. Also due out late in the week is the third-quarter gross domestic product. View Economic Preview, economic calendar and forecasts and historical economic data.
Cornering the currency market, dollar/yen shed 0.1 percent to 108.14 while euro/dollar traded up 0.2 percent to 0.8369. |
