DJ MARKET TALK: A Recession Might Just Hurt After All ...
Edited by George Stahl
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
1:53 (Dow Jones) What do you do after you predict a recession? If you're
Morgan Stanley Dean Witter - which told investors on Tuesday to brace for
the downturn - you cut earnings estimates and price targets for business
service providers that could see slackening demand. Administaff's (ASF)
share target was shaved to $40 from $41, Dycom Industries' (DY) was reduced
to $50 from $52 and Manpower's (MAN) was cut to $41 from $42. Hey, that's
not too bad. But further into the report Morgan Stanley notes, "This could
be the first round" of cuts for some of these companies. Oh. (KJT)
1:45 (Dow Jones) All may not be lost for Chiquita Banana (CQB) holders,
Prudential Securities' John McMillin says following news that the produce
concern is considering a pre-packaged bankruptcy filing. He tells clients
that the Bush administration may seek to get tough with the European Union
over bananas. "We would advise beaten-down shareholders to hang on, seeing
the stock as an option on trade reform," McMillin says. (RLG)
1:36 (Dow Jones) Will interest rates trump valuations? With a couple of
major caveats - a recession, say, or too many earnings disappointments and
all bets are off - Anderson-Strudwick strategist Kent Engelke says yes.
Stocks may be reaching a bottom. From what he can tell, we're entering a
"growth recession," not a traditional contraction. Earnings remain a
question mark, obviously, but with 720 companies reporting we should have a
better idea by the end of the week. (MER)
1:23 (Dow Jones) Bond futures trader says long end rallying so hard because
market was oversold going into today's session, with contract just having
put in a one-tick new low at a double bottom on technical charts. Also, word
that Japanese considering quantitative easings said to be helping out short
end, as thoughts of U.S. near-term Fed ease once again come into play. (CMN)
1:20 (Dow Jones) Analysts and traders have long used whisper numbers to
estimate what companies will really earn. What about whisper numbers for
stock price targets? VA Linux Systems (LNUX) will miss earnings and revenue
estimates, prompting WR Hambrecht to reduce shares to neutral from buy. But
Hambrecht analyst Prakesh Patel's report leaves blank the space for his
12-month price target. Contacted by phone, Patel said he was reluctant to
set a target for a stock that's rated neutral and was trading at $164 a year
ago. His whisper number: $10 for shares that closed at 9.13 on Tuesday.
(KJT)
1:09 (Dow Jones) The NAHB index for sales of new, single-family homes fell
for a second straight month in Jan, dropping to 54 from 58 in Dec. The
latest reading is the lowest in almost four years. (FL)
1:06 (Dow Jones) National Association of Manufacturers said today's
industrial production numbers are "grave" and show the urgent need for
another interest rate cut by the Fed. NAM also said inflation "is not much
of a threat." (JC)
12:53 (Dow Jones) America's Community Bankers and Fannie Mae plan to
announce Thursday "a nationwide cooperative relationship to expand
homeownership lending opportunities for community banks and their
customers." (JC)
12:43 (Dow Jones) Letter from CBOT's Neubauer to exchange members being
distributed on floor. Neubauer tells members exchange will file its
restructuring statement to the SEC within about the next 10 days. Neubauer
says once SEC has declared registration statement effective, plan will go to
a member vote. (CMN)
12:25 (Dow Jones) All the major indexes are higher, led by a 5% gain for the
Nasdaq Composite. Nasdaq is up over 129 points. DJIA, after being in the red
for much of the morning's trading, is now up 23 points. (RJH)
12:17 (Dow Jones) USD/JPY hitting new intraday highs at Y118.33 after more
O'Neill news. O'Neill comment that he's not worried about current-account
deficit was seen as dollar-positive, trader said, giving a "second push" to
the dollar/yen climb set in motion by euro-yen selling to technical levels.
(JEN)
12:10 (Dow Jones) The CBOE has initiated a routine investigation into
unusual trading in the options of Allaire (ALLR), a Web software company
that announced after markets closed Tuesday that it would be acquired by
Macromedia (MACR). Allaire's call options traded actively Tuesday, with more
than 44,000 contracts of the February 7.50 calls trading, although it isn't
immediately clear whether these bullish calls were bought or sold by
investors. (KXT)
12:07 (Dow Jones) Chip stocks rallied Wednesday after strong earnings
reports from Applied Micro Circuits (AMCC), Linear Technology (LLTC) and
Juniper Networks (JNPR). In addition to the earnings, which topped Wall
Street views, both AMCC and Juniper gave bullish outlooks for the March
quarter. The Philadelphia Semiconductor Index was recently up 10%. (DLF)
12:04 (Dow Jones) Prudential suggests investors still accumulate shares of
MCK Communications (MCKC), but they should lower their sights on where the
stock is going. Analyst Randy Scherago cut his price target to $7 from $30
"to reflect current market conditions." Shares recently traded at $5.38.
(RJH)
11:58 (Dow Jones) Manufacturers are being hit severely by natural gas price
hikes, according to a new survey taken by the National Association of
Manufacturers. (JC)
11:51 (Dow Jones) KeraVision (KERA) is moving in the right direction by
cutting 76% of its workforce and concentrating on R&D, says SG Cowen analyst
Matt Dodds. But it does face so long-term issues. Its cash position suggests
it has three or four quarters left "to find its market niche," but it also
faces the possibility of a Nasdaq delisting, Dodds says. Still, Dodd has a
buy rating and believes that it can still wiggle through. (RJH)
11:43 (Dow Jones) Floor traders say they've seen mixed dealer activity in
March Nasdaq. Merrill and Goldman each seen as buyers, with Morgan Stanley a
seller. Market remains strong and appears to be the lifeline for the rest of
the stock indexes, they add. (DMC)
11:41 (Dow Jones) March S&Ps are holding gains in mid-morning trade, with
activity still light, floor traders note. "I have a positive outlook for the
market, but it does feel like we're being artifically supported by Nasdaq,"
one trader says. No standout activity. (DMC)
11:33 (Dow Jones) Bank of America's (BAC) 4Q "is ugly and is below consensus
- but it is not at all an 'out of control' quarter," says Prudential analyst
Nancy Bush. Her view: Bank of America "will muddle through its problems, but
credibility remains an issue." She kept her hold rating and says that the
stock, over $50 a share, "is not all that cheap." (RJH)
11:27 (Dow Jones) So far, so good where stocks, especially tech stocks, are
concerned. The one thing that could easily deflate the bullish rally begun
last week is bad earnings news, and that hasn't happened yet. Out of 52
earnings report Tuesday, 46 met or exceeded Wall Street's lowered estimates,
according to Schaeffer's Investment Research. (KXT)
11:22 (Dow Jones) Nymex crude oil slips to day's lows in classic "buy the
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