MARKET TALK: Tech Bear Has More To Go, Merrill Report Says
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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1:20 (Dow Jones) That Nasdaq is such an overachiever. During the past few
years, the Nasdaq Composite index has been the source of Internet mania, or
the greatest stock sector extreme in history, the largest gains ever for
companies without earnings and the longest run of way-above-average returns.
But that's not all, says a report from Merrill's Robert Farrell "The bear
market in technology still has a long way to go," the report states. "The
increase in fundamental disappointments in technology is likely to
contribute to extending the corrective process well into 2001." (KJT)
1:09 (Dow Jones) S&P says AT&T's revised revenue guidance for 4Q doesn't
impact the company's credit rating or outlook. The company's ratings remain
on credit watch with negative implications, but "AT&T's debt reduction trend
is still on track." (SPC)
12:56 (Dow Jones) "In the throes," "savagely," "decimated," and "scorned."
No, it's not a passage from a racy novel, it's Bear Stearns chief investment
strategist Elizabeth Mackay in a note to clients, discussing the stock
market's behavior. Her conclusion? The worst is over - it's not March 10,
when the Nasdaq peaked and began its gut-wrenching nine-month swoon. "The
maximum risk in this market is not now," Mackay said. (KJT)
12:43 (Dow Jones) March S&Ps and Nasdaq remain quietly firmer at midday,
with the markets holding most of their gains. Traders say locals now
dominate as volume turns light. March S&Ps gains are capped at 1304, Wed's
high, and aren't likely to break through unless a fresh wave of short
covering comes into market. (DMC)
12:38 (Dow Jones) Nymex crude bounces on shortcovering, but after reaching
technical target $26.25, $27 seen out of reach by some if complex gains
fade. "Bear markets are much quicker than bull markets," analyst says. "They
don't have long periods of consolidation." Near-term funds-selling objective
is $25-$24. "They're booking their profits (on short-selling) before year's
end. They're facing a lot of pain from the stock market." (MSX)
12:33 (Dow Jones) "Many millions of middle-class investors face the
likelihood of large tax bills on capital gains distributions by mutual funds
at the end of 2000, even though the share prices of many mutual funds
actually plunged over the year," says Rep. Jim Saxton, R-N.J., vice chairman
of the Joint Economic Committee, who wants to pass a bill to stop "this
unfair tax treatment." (JC)
12:21 (Dow Jones) The sell recommendation comes when things really get bad.
With a damaged reputation in the industry and financial markets, a
struggling largest customer, and a softening telecommunications business,
"we believe the Virata (VRTA) business model is in extreme peril," says Banc
of America Securities analyst Alex Gauna, who reduced shares of the
communications chip maker to market perform from strong buy. (KJT)
12:10 (Dow Jones) Fed funds futures trader says his market currently pricing
in about a 60% chance of a 50 basis point ease in Jan. According to the
April contract, participants also looking for a 100% chance of a 50 basis
point ease and 80% chance of a 75 basis point ease by the end of the first
quarter. (CMN)
12:08 (Dow Jones) Estee Lauder (EL) is looking a bit pale to Merrill Lynch,
although the investment firm isn't telling the make-up maker to take a
powder. Citing the prospect of softer sales in a slowing economy, Merrill
Lynch reduced shares to near term neutral from accumulate, but kept a
long-term buy rating.(KJT)
11:55 (Dow Jones) Chuck Phillips, Morgan Stanley's influential software
analyst, sees a "clear deceleration" in corporate IT spending budgets and
downgrades five companies to neutral - sending the stocks reeling. Phillips
says he doesn't expect the softer spending to hurt 4Q much, but will make
for tough 1Q. Cuts Computer Associates (CA), J.D. Edwards (JDEC), Documentum
(DCTM), SAP AG (SAP) an McAfee.com (MCAF) saying they have more seasonal
quarters and are in mature sectors without the growth to pull them through a
lean first half. (MLP)
11:52 (Dow Jones) In an internal memorandum sent to employees Wednesday,
Charles Schwab Corp. (SCH) said it plans to cut officers' salaries in
January and February and trim 2001 1Q bonuses for all employees in a move to
stave off what could be a "rocky" beginning of 2001. The discount brokerage
firm also asked employees to take voluntary unpaid leave during the first
three months of the year. Co-Chief Executives Charles Schwab and David
Pottruck also will have their salaries reduced by 50% in the first two
months of 2001. (CUB)
11:48 (Dow Jones) March S&Ps and Nasdaq are making new session highs in
mid-morning trade, as short covering lifts the markets. Merrill Lynch
continues to be a solid buyer, with some traders estimating they've bought
about 3K on the day. Goldman a solid buyer of Nasdaq, about 1K on the day.
Other buyers in S&Ps include BNP and Bear Sterns. Traders say market acts
decently and could hold gains. (DMC)
11:39 (Dow Jones) Thrifts, those busy mortgage lenders, are going to be
among the first beneficiaries of the Federal Reserve's interest rate
reductions, says Banc of America Securities. The firm has raised price
targets for Golden West Financial (GW), Charter One Financial (CF) and
Golden State Bancorp (GSB). (KJT)
11:30 (Dow Jones) The 30-year bond is getting hammered, down 1 1/32, as
stocks pop higher. Some profit-taking from Wednesday's big session also in
play. (MSD)
11:26 (Dow Jones) When investors do return to technology, they should do so
with a new way of looking at the sector, Merrill Lynch says. PC and many
computer chip companies are the growth-engines of yore. Growing demand for
"information digitization" requires systems that can store data quickly and
comprehensively. That makes stocks like Network Appliance (NTAP), EMC (EMC)
and Brocade Communications (BRCD) the best positioned, a Merrill report
states. (KJT)
11:11 (Dow Jones) It's not the macarena, but the Mac-D could help stocks
dance to the upside, one technical analyst says. The moving average
convergence divergence considers overbought and oversold conditions. It
shows that yes, stocks keep falling, but their new lows aren't as steep,
suggesting the selling is becoming less fierce, said Jay Lefkowicz, chief
technical analyst at Morgan Wilshire Securities. (KJT)
(END) DOW JONES NEWS 12-21-00
01:21 PM |
