Market behaves oddly:
Big caps erase all gains, is it fake?
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ISLAND REAL TIME AFTER HOURS ACTIVITY SUMMARY
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SHARES MATCHED ORDERS BOOKED SHARES BOOKED
4,528,322 51,976 31,908,678
# SYMBOL MKT SHARES
MATCHED
LAST
TRADE PRICE LAST
TRADE TIME OPEN
ORDERS
NET
CHANGE
PERCENT
CHANGE
1 QQQ NY 361,864 68.6250 17:27:44.23 38 N/A N/A
2 SUNW NM 185,003 37.7500 17:38:05.69 751 -1.1875 -3.05%
3 CSCO NM 168,326 50.3700 17:38:34.93 974 -2.0050 -3.83%
4 CIEN NM 153,889 108.2500 17:38:07.19 295 -5.7500 -5.04%
5 MSFT NM 148,823 52.6875 17:38:31.42 503 -1.7500 -3.21%
6 INTC NM 134,738 32.7500 17:38:19.47 1,130 -1.2500 -3.68%
7 INTU NM 125,779 48.4375 17:23:55.40 64 -0.6875 -1.40%
8 JDSU NM 123,530 70.0000 17:38:05.32 564 -4.5625 -6.12%
9 YHOO NM 121,639 34.0000 17:37:43.59 641 -0.9375 -2.68%
10 JNPR NM 118,346 155.5000 17:38:34.08 463 -10.6250 -6.40%
11 INSP NM 86,075 12.4375 17:37:05.00 230 -1.2500 -9.13%
12 ORCL NM 75,271 28.5000 17:36:10.66 917 -1.5625 -5.20%
13 ATML NM 72,191 12.6250 17:34:46.76 190 -1.1250 -8.18%
14 BVSN NM 62,393 22.0000 17:38:31.95 535 -1.7500 -7.37%
15 CMRC NM 60,709 37.5000 17:37:32.81 284 -3.2500 -7.98%
16 SSTI NM 54,988 14.3750 17:21:47.55 178 -1.0625 -6.88%
17 NPNT NM 53,647 0.3906 17:38:36.13 109 -0.0156 -3.85%
18 CMGI NM 53,397 11.0100 17:38:55.52 326 -0.9275 -7.77%
19 SDLI NM 51,546 254.5000 17:36:27.66 114 -16.1250 -5.96%
20 QCOM NM 50,939 98.0000 17:35:20.91 321 -5.2500 -5.08%
Election fracas dents stock rally
Florida high court orders manual recount
By Martin Cej, CBS.MarketWatch.com
Last Update: 5:32 PM ET Dec 8, 2000
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NEW YORK (CBS.MW) - Stock index futures and some shares slumped after the closing bell Friday as Florida's Supreme Court ordered an immediate manual recount of "undervotes" in all counties. U.S. stock indexes are expected to open lower Monday.
The court's decision, which came minutes after the close, undermined investors' growing confidence that a resolution to the battle for the U.S. presidency was at hand. Undervotes are ballots that showed no valid vote for president when read by the voting machines.
"Until America learns how to run a democracy, the market can go nowhere," said Robin Griffiths, chief technical analyst at HSBC Securities in New York. "This is an obstacle none of us have seen before."
Stocks such as Philip Morris, Microsoft and Pfizer, which are perceived as particularly sensitive to a Gore administration, tumbled in the after-hours session. Read more after-hours action.
"We need this to be resolved," Griffiths said. "It won't alter the slowing economy or oil prices but people need to feel that the decision is fair and just, and the system works."
Reflecting the market's unease with political uncertainty, S&P 500, and Dow Industrial stock futures fell while Nasdaq futures hung on to a portion of their earlier gains. S&P 500 futures were trading down 1.5 points at 1,355 while Nasdaq 100 futures rose 102.50 to 2,825.
Before the ruling, stocks soared, driving the Nasdaq Composite to its highest close in three weeks, after a smaller-than-expected increase in new jobs added to the economy stirred fresh hope that the next move in interest rates will be lower.
Investors snapped up beaten-down technology issues after the U.S. Labor Department reported that the unemployment rate rose to 4 percent in November from 3.9 percent in the previous month, matching forecasts and further underscoring expectations that the world's largest economy is cooling sufficiently to warrant lower rates. Hear MarketWatch's Rachel Koning's analysis.
The Federal Reserve's policy-setting Open Market Committee meets Dec. 19, and while it's not expected to lower rates, the central bank is seen taking the first step in that direction by moving to a neutral bias from its current, and more aggressive, stance.
Stock gains were also underpinned by optimism the battle for the U.S. presidency is closer to a resolution. Read more on the fracas in Florida.
The employment data outweighed a warning from Intel after the closing bell Thursday. The world's largest computer chip maker became the latest in a growing list of companies to slash their forecasts when it announced that fourth-quarter revenue will be unchanged from the third due to dwindling PC sales.
The tech-laden Nasdaq Composite Index ($COMPQ: news, msgs) rallied after two straight days of losses, soaring 163.36, or 5.9 percent, to 2,916,02, its highest close since Nov. 17. The world's technology benchmark stumbled after notching its biggest single-day gain ever Tuesday in the wake of comments from Fed Chairman Alan Greenspan, who revived optimism that rates will start coming down in 2001.
Internet issues and chipmakers set the pace among the technology stocks, while banks, brokers and airlines helped the broader market. Stocks that benefited from the recent rout in technology shares, such as drug makers, sat out the advance as investors scrambled to raise cash for tech stock purchases.
Natural gas stocks and petroleum companies also slipped.
The Dow Jones Industrial Average ($DJ: news, msgs) jumped 95.55 points, or 0.9 percent, to 10,712.91. The Standard & Poor's 500 Index ($SPX: news, msgs) added 27 points to 1,369.
Some 1.3 billion shares changed hands on the New York Stock Exchange while 2.3 billion were bought and sold on the Nasdaq market. Rising stocks outnumbered declining issues by about five to two on the NYSE and seven to three on the Nasdaq market.
"There have been a lot of warnings but people are beginning to look over the individual warnings and ask themselves what the Fed is going to do," said Lloyd Atkinson, chief investment officer at Perigee Investment Counsel, which oversees about $14 billion in assets, including shares of Intel.
"Has there been a slowdown? Of course there has. The Fed engineered it," Atkinson argued. "But we should take Greenspan at his word. If the slowdown becomes excessive, then the Fed will do what is necessary."
The Labor Department said the U.S. economy added 94,000 new jobs in November, compared with the 149,000 anticipated by economists surveyed by CBS.MarketWatch.com. See full story.
Average hourly earnings, a key gauge of inflation, rose 0.4 percent in the month, topping the average estimate of 0.3 percent.
Combined, the reports renewed hope that the Fed will begin to cut lending rates soon, which is good news for consumers and companies alike. Lower rates stimulate spending and corporate expansion by cutting the cost of borrowing money.
"This report gives the Fed more evidence and more ammunition to go straight to a cut in January," said Barry Hyman, chief investment strategist at Weatherly Securities.
Hyman expects the Fed to lower its benchmark Fed funds rate by at least 50 basis points in the first half of 2001. The rate currently stands at 6.50 percent.
"The Fed is on the side of the market," he said.
Warnings watch
Intel (INTC: news, msgs) , the world's largest computer chip maker, warned after the closing bell Thursday that the cooling economy was crimping demand for personal computers, forcing the cancellation of orders and hobbling Intel's revenue growth. See full story.
The company said it anticipates fourth-quarter revenue to be about equal with the third quarter, which was $8.7 billion. Intel had previously expected to grow sales from 4 percent to 8 percent from the third quarter.
The company, which did not provide an estimate for earnings in the quarter, saw its stock rise $1.69 to $34.
The Philadelphia Semiconductor Index ($SOX: news, msgs) , the most widely-watched measure for the chip industry, soared 12 percent.
Analyst Dan Niles at Lehman Brothers wasn't convinced that Friday's rally had staying power. While Intel's advance could indicate that all the near-term bad news has been priced in, he thinks "this could be the beginning of a false trading rally" that could lift the Philly Semiconductor Index 15-to-20 percent, but believes it will be short lived. The analyst advised clients to "sell into it."
Niles wasn't alone in his cautious stance to Friday's rally.
A small group of investors and analysts are still expecting troublesome times ahead.
Tim Gleeson, senior vice president of asset management at Mackenzie Financial, which runs about $24 billion in assets, believes the Fed is reacting too slowly.
"Greenspan is a hero to most people, but I think he's steered us back towards a 1970s style policy," Gleeson said. "I think he's behind the curve, and it's not even certain that rates will come down."
"Inflation is still a risk," Gleeson cautioned.
Among other industry groups, the Goldman Sachs Internet Index ($GIN: news, msgs) surged 10.4 percent; the S&P Banking Index ($BIX: news, msgs) rose 1.3 percent, the Amex Airline Index ($XAL: news, msgs) jumped 5.2 and the Pharmaceutical Index ($DRG: news, msgs) added a modest 0.1 percent.
Intel's warning adds to a growing list of companies, from banks to retailers, which have slashed their expectations due to the slowing economy. The U.S. economy slowed to a pace of 2.4 percent in the third quarter, compared with a rate of 5.6 percent in the second quarter.
Intel's news came on the heels of quarterly warnings from heavyweights such as Motorola (MOT: news, msgs) , Gateway (GTW: news, msgs) , Altera (ALTR: news, msgs) , LSI Logic (LSI: news, msgs) and Apple Computer (AAPL: news, msgs) , as well as a cautious tone sounded by National Semiconductor (NSM: news, msgs) on its outlook. Listen to interview with National Semi CEO Brian Halla.
On the move
Investors punished Ask Jeeves (ASKJ: news, msgs) , sending the stock down $5.88, or 61 percent, to $3.81. The online question-and-answer service said late Thursday that it expects fourth-quarter revenue of roughly $25 million and a net loss of $18 million, or 50 cents a share. Analysts polled by First Call were expecting a loss of 33 cents a share.
Merrill Lynch issued a midday research note on Sun Microsystems (SUNW: news, msgs) , saying it understands that there are "some concerns on the Street" regarding accounting irregularities at the Palo Alto, Calif., server giant. Merrill expressed doubt in the possibility.
"We believe CFO Mike Lehman is one of the most conservative on the street and we have no reason to believe there are any accounting irregularities at the company," the note states. Sun wasn't immediately available for comment.
Sun shares fell $3.88 to $38.94.
Priceline.com (PCLN: news, msgs) gained 56 cents to $2.44. The name-your-price online service said after Thursday's close that it has cut 11 percent of its staff and indefinitely has put off getting into new businesses. The troubled Internet auction retailer said it "has refocused resources" on its core businesses.
Investors applauded Emulex's (EMLX: news, msgs) announcement after the close Thursday that the Costa Mesa, Calif., provider of fibre channel host bus adapters agreed to acquire privately-held Giganet for about $645 million in stock. Emulex also said that for the fiscal 2001 year ending in July, it expects pro forma earnings per share of $1.48 on revenue of $285 million, ahead of First Call's average estimate. Emulex shares rose $23.31 to $178.63.
Demand for debt wanes
Treasury securities fell as investors sold bonds to buy stocks.
The benchmark 10-year note ($TNX: news, msgs) shed 7/32 at 103 3/32. Its yield, which moves inversely to price, rose 3 basis points to 5.53 percent. Yields on the 10-year issue have hovered at their lowest levels since April 1999 in recent sessions.
A 30-year bond ($TYX: news, msgs) fell 6/32 to 110 19/32 with its yield up 1 basis point at 5.52 percent. See Bond Report.
Investors will face of slew of economic and inflation data next week, including reports on retail sales, consumer price inflation and producer price inflation.
In the currency market, dollar/yen gained 0.2 percent to 110.46 while euro/dollar gave up 0.3 percent to 0.8889.
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Martin Cej is a reporter for CBS.MarketWatch.com in San Francisco.
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