UPDATE: M A R K E T .. S N A P S H O T .. No buyers in sight
Sullen open seen as averages lick their wounds
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 8:59 AM ET Jan 3, 2001
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NEW YORK (CBS.MW) - While U.S. markets are searching for buyers Wednesday, it doesn't appear that they'll be showing up at the open as the futures markets promptly reversed early, feeble gains.
The selling has been particularly hurtful to tech stocks. Consider this: From peak to trough, the Nasdaq has lost 55.7 percent of its value.
March S&P 500 futures erased 5.30 points, or 0.4 percent, and were trading roughly 4.00 points below fair value, according to HL Camp & Co. Nasdaq futures, meanwhile, gave up 37.50 points, or 1.7 percent, relinquishing early gains.
The recent flurry of negative analyst actions, that continued unabated on Tuesday and Wednesday, put an additional damper on investor sentiment.
Morgan Stanley Dean Witter slashed its rating on Texas Instruments (TXN: news, msgs) to a "neutral" from an "outperform," citing weakening global demand and a lack of near-term catalysts. An inventory correction last summer caused by lighter-than-expected cell phone demand has weighed heavily on the industry, the brokerage said. But MSDW believes that robust demand for cellular handsets should re-accelerate in the second half of 2001. TI shares slipped $2.31 to $44 in Instinet. See Indications.
Separately, the Semiconductor Industry Association reported that worldwide chip sales were up 28.4 percent in Nov. 2000 from the year-ago period, noting that the chip industry remains on track to achieve a 37.1 percent growth rate in sales over 1999. Commenting on the SIA figures, CS First Boston said the November data were down from a 39 percent growth rate in October and a peak of 52 percent in August. The numbers, CS FB said, further reaffirm that investors should take a cautious stance and remain on the sidelines until signs of reaccelerating growth begin to appear in the chip industry.
Among other tech shares trading before the official opening bell, tech giant Cisco Systems (CSCO: news, msgs) lost 75 cents to $32.56 in Instinet after losing a staggering 13 percent in Tuesday and reaching a fresh 52-week low of $32.63.
Morgan Stanley also took a negative action against Caterpillar (CAT: news, msgs) , lowering the Dow company to a "neutral" from "outperform" as the stock price has gone through the brokerage's target. "Our downgrade on CAT could well be a bit early, given that the shift away from the technology sector may still have room to run. But deciding when to sell CAT is as important as deciding when to buy," the firm told clients in its research note. The stock closed on Tuesday off $1 to $46.31.
Treasurys mixed
Treasury prices traded mixed, with the 30-year wiping out early gains in volatile action while the 10-year continued its ascent in the aftermath of a powerful rally Tuesday that took long-term yields near two-year lows.
The 10-year Treasury note put on 3/32 to yield ($TNX: news, msgs) 4.90 percent while the 30-year government bond edged down 1/32 to yield ($TYX: news, msgs) 5.335 percent.
Wednesday will see the release of November construction spending, seen increasing 0.1 percent. View Economic Preview, economic calendar and forecasts and historical economic data.
In the currency arena, dollar/yen slipped 0.2 percent at 114.17, interrupting a six-day winning streak, while euro/dollar edged up 0.1 percent to 0.951 and reached an intra-day peak of 0.9571, a six-month high.
"The truth of the matter is not that Euroland is suddenly doing so well or has become so appealing to internationally mobile investors. However, the U.S. with its depressed Nasdaq and enfeebled Dow now looks decidedly less attractive. So does Japan, with deeply depressed equity markets, depression-level interest rates and deflation," commented Carl Weinberg, chief economist at High Frequency Economics. |
