Goldman also initiated coverage of Apple Computer (AAPL: news, msgs, alerts) , Gateway (GTW: news, msgs, alerts) and Compaq (CPQ: news, msgs, alerts) at a "market outperformer."
Stocks poised for a setback
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 8:42 AM ET May 23, 2001
NEW YORK (CBS.MW) -- Tech and blue chips alike are bracing for a pullback at the open Wednesday. For the Nasdaq, a close in the red would interrupt a six-day winning streak.
Still, recent achievements are nothing to scoff at: the Nasdaq is at a 3-month high while the Dow Industrials has swelled to levels last seen back in January 2000.
June S&P 500 futures fell 4.10 points, or 0.3 percent, and were trading about 3.40 points below fair value, according to HL Camp & Co. data. And Nasdaq futures gave up 13.50 points, or 0.7 percent.
While a number of tech stocks declined in the pre-market -- including Cisco Systems and Intel -- Dell Computer (DELL: news, msgs, alerts) flew 4 percent on the wings of two analyst notes. See Indications.
Dell was added to Merrill Lynch's "Focus One List" based on the brokerage's belief that the PC maker has "outstanding long-term prospects." Analyst Steve Fortuna said that as Dell's server mix shift becomes richer, the opportunity set in services and storage will likewise become more compelling and more lucrative.
"For the PC market in general, Dell's cost model advantage is compelling and should enable the company to continue to outpacing industry growth by a healthy margin," Merrill said in its research note.
In the meantime, Goldman Sachs initiated coverage of Dell, adding the stock to its "Recommended List" and setting a 12-month price target of $32. "Despite difficult sector fundamentals in the near-term, we believe Dell's market share gains are reaccelerating given recent component price declines and that Dell's structural position is improving across all of its end markets," Goldman told clients.
Goldman also initiated coverage of Apple Computer (AAPL: news, msgs, alerts) , Gateway (GTW: news, msgs, alerts) and Compaq (CPQ: news, msgs, alerts) at a "market outperformer."
Separately, Semiconductor Equipment and Materials International said the April book-to-bill ratio for North American-based manufacturers of semiconductor equipment stood at 0.42, below March's 0.59 level and its lowest level in a decade. A book-to-bill of 0.42 indicates that $42 worth of new orders were received for every $100 of product shipped for the month. April orders fell 41 percent from March. SEMI called the severity and depth of the industry correction "unprecedented."
Lehman Brothers said April's industry data set a number of "worst ever" records, indicating that the current downturn will be the most severe the industry has seen. "While we believe fundamentals will decline further, the data suggests that the industry is nearing a bottom," Lehman stated in a research note.
Treasury focus
Government issues continued to trade mixed, with the 10- and 30-year segment coming under more pressure while short- and intermediate-term issues generated some modest gains following a brutal sell-off last week.
The 10-year Treasury note was off 2/32 to yield ($TNX: news, msgs, alerts) 5.41 percent while the 30-year government bond lost 6/32 to yield ($TYX: news, msgs, alerts) 5.79 percent.
Again, no data is set for release on Wednesday. View Economic Preview and economic calendar and forecasts.
Checking the currency space, dollar/yen dropped 1.3 percent to 121.20 while euro/dollar continued its descent, erasing 0.8 percent to 0.8582 and again hovering at levels not seen since late November.
In the meantime, as had been expected, the European Central Bank left short-term rates unchanged at its policy-setting meeting. The euro had a generally muted reaction to the news.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com in New York. |
