M A R K E T .. S N A P S H O T --Major averages build on gains
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 10:01 AM ET Mar 26, 2001
NEW YORK (CBS.MW) - Investors were in a buying mode Monday, with the broad market enjoying decent gains right out of the gate.
The Dow Jones Industrials Average ($DJ) put on 98 points, or 1.0 percent, to 9,602.
The Nasdaq Composite ($COMPQ) advanced 19 points, or 1.0 percent, to 1,948 while the Nasdaq 100 Index ($NDX) gained 18 points, or 1.1 percent, to 1,723.
"Short-term sentiment seems consistent with at least a minor bottom here. The various investor surveys last week showed a big jump in bearish sentiment, most notably among individual investors -- which is usually a reliable signal of at least a short-term bottom. At the same time advance-decline volume and breadth indicators are also up from extreme oversold levels," said Richard Dickson, technical strategist at Scott & Stringfellow.
"The bad news is that the good news listed above is about it for the good news," Dickson continued, adding that volume and market breadth is not consistent with a significant bottom. While recent price action is consistent with a possible short-term and maybe even an intermediate-term low, the strategist said it's not consistent with an important market low.
"We're sticking with the forecast we made Friday: a short-term rally, then a probable retest of the lows. If that test occurs on light volume, indicating that the selling is about exhausted, then we'll feel a lot more comfortable talking about a possible intermediate-term rally," Dickson said.
The Standard & Poor's 500 Index ($SPX) jumped 1.1 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks added 0.6 percent.
Volume came in at 50.9 million on the NYSE and at 97.4 million on the Nasdaq Stock Market. Market breadth was positive, with advancers beating decliners by 14 to 6 on the NYSE and by 17 to 7 on the Nasdaq.
Elsewhere, Trim Tabs reported that U.S. equity funds lost an estimated $3.6 billion during the three days ending March 22. The fund flow tracker defined liquidity as "horrible," indicating that equity funds had redemptions for a second straight week and for four out of the past five.
Individual movers
PMC-Sierra shed 6 percent to $31.94. The communications chip company (PMCS) warned early Monday that first-quarter revenue and earnings will be lower than anticipated due to weak demand and cancellation of backlog during the quarter. Earnings-per-share are expected to come in at 2 to 3 cents vs. the First Call/Thomson Financial estimate of 12 cents. In addition, PMC-Sierra said it'll reduce its work force by 230.
But PMC-Sierra wasn't the only company in the group to warn of a shortfall. Fellow communications chip maker Conexant Systems (CNXT) informed investors that it expects revenue for its fiscal second-quarter to be 35 to 40 percent lower than previously anticipated due to continuing weak demand and excess inventory. Based on that expected revenue level, a loss of 35 to 40 cents a share is now expected vs. the loss of 24 cents a share that First Call had projected. The company also announced a number of initiatives to cut costs, including a 20 percent reduction in its work force. The stock shaved 3.4 percent in recent trading. Among other stocks in the group, Vitesse Semi fell 4.5 percent, Applied Micro Circuits lost 6.4 percent and TranSwitch declined 3.2 percent.
In merger news, LSI Logic (LSI) said it's purchasing C-Cube Microsystems (CUBE) in a stock deal valued at approximately $878 million. Each share of C-Cube will be exchanged for 0.79 of a share of LSI Logic. LSI lost 9 percent while C-Cube surged 62 percent.
Cisco Systems (CSCO) shed 0.3 percent to $18.56. In an interview with the Financial Times, Cisco CEO Jon Chambers said that the U.S. economic slump would continue for "at least three more quarters" and perhaps longer. Chambers told FT that the U.S. economic outlook had deteriorated significantly since Cisco warned in January that it expected the downturn to last for two quarters or more.
Treasury focus
In the Treasury arena, prices slumped across the board as equity prices headed higher.
The 10-year Treasury note was off 10/32 to yield ($TNX) 4.85 percent while the 30-year government bond lost 11/32 to yield ($TYX) 5.33 percent.
On the economic front, February new home sales, seen coming in at 912,000, are set for release. Also due out are February existing home sales, expected to come in at a 5.04 million rate.
The week's kingpin - March consumer confidence -- will be released on Tuesday. View Economic Preview and economic calendar and forecasts.
In the currency arena, dollar/yen gained 0.3 percent to 122.94 while euro/dollar climbed 0.6 percent to 0.8957.
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