MARKET TALK: Look For 25 BP In June, Not 50, UBS Now Says
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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MARKET TALK can be found using code N/DJMT
1:55 (Dow Jones) UBS Warburg changing its June Fed forecast to a 25 BP rate
cut to 3.75%. Firm had been looking for 50 BP. Economist Jim O'Sullivan said
news of a more front-loaded tax cut this year prompted the shift. (BB)
1:38 (Dow Jones) The Nasdaq Composite just ticked below 2180 support. That
means the index is likely to record a low for today near 2140. In any case,
the index will have to close out this week above 2291 before it has a shot
at the 2500 resistance area. (SC)
1:26 (Dow Jones) Stocks peeling back a bit - DJIA off 7 at 10998, Nasdaq
drops 69 to 2182, and S&P 500 falls 10 to 1268. Internets, computers, semis
all among tech groups getting hit hard. EMC and Sun provide pressure, and
there are plenty of big names down 7%-8%. Insurance, drugs act well. (TG)
1:12 (Dow Jones) A month ago, when 10-year Treasuries were yielding 4.70%,
the S&P 500 was 24% undervalued on a comparative basis, says J.P. Morgan's
Douglas Cliggott. Now, with the 10-year yielding 5.50% and after stocks'
recent run-up, the S&P is 5% rich relative to bonds, Cliggott says. (KJT)
1:03 (Dow Jones) UBS Warburg analyst Linda Meltzer says AT&T's (T) exchange
offer for AT&T Wireless (AWE) stock was undersubscribed by about 55 million
shares. "To us, it appears investors are seeking the mix of AT&T's
sum-of-the parts value," to be realized later in the year when the company
is expected to be spun off into four units, she says. (CBN)
12:56 (Dow Jones) Best cure for high U.S. energy prices "is probably high
energy prices," says S&P utility and energy analyst Richard Cortright. Tells
teleconfab S&P "isn't convinced" country is in an energy crisis but sees
serious problem in "a dearth of infrastructure investment." Rejects price
controls and says Dubya's proposal to open Arctic Wildlife Refuge to
exploration won't work since OPEC can withhold from market as much as that
would produce. (SDR)
12:42 (Dow Jones) Investors were bidding up shares of beleagured B-to-B
outfit PurchasePro.com Inc. (PPROE) Tuesday after the Las Vegas company
delivered its delayed first-quarter filing to the SEC. Analysts attributed
Tuesday's gains to short-covering and to the notion that the full extent of
PurchasePro's earnings revision is at last clear. When it reported initial
results in April, PurchasePro said it lost 26 cents a share on $29.8M in
revenue. In the recent filing, however, the company said it lost 49 cents a
share on $16M in revenue. PurchasePro stock was recently up 17% at $1.82.
(RS)
12:31 (Dow Jones) The American Stock Exchange on Thursday will launch
options trading on seven companies, including American Eagle Outfitters
(AEOS), Dollar Tree Stores (DLTR), Marsh & McLennan Cos. (MMC), and Toys "R"
Us (TOY). (KT)
12:25 (Dow Jones) H&R Block CEO Mark Ernst, commenting on newly-passed tax
cut, says "it's not a home run, but you could call it a triple for upper
income taxpayers, a double for middle-income families, and a single for
low-wage earners." (JC)
12:20 (Dow Jones) Technically, Treasurys look good, given they should have
done better on Friday after that morning's data, says Michael Krauss, a
strategist at JPMorgan Chase. "Bonds should outperform stocks near term, but
medium term and long term outperformance bias goes to equities," he says.
(MSD)
12:07 (Dow Jones) Corporate bonds have been on a tear in recent weeks but
it's time for some validation, says JP Morgan in its latest credit report.
Market sees a 2H earnings rebound but earnings may be only bottoming out in
3Q. Therefore, watch for spreads to move sideways while fundamentals catch
up with market, JP Morgan says. (CSE)
11:52 (Dow Jones) Here's a technical trading idea from Todd Gold at Gruntal
& Co. Hudson United (HU), at $24.25, should be able to move to $25.50, and
through this point to $28 and potentially $31.50. The pattern would keep
with higher lows and higher highs that the stock has been making, says
Gruntal's chief technical analyst. (KJT)
11:42 (Dow Jones) The 30-year bond has taken off as yield curve flattening
plays have come into vogue after the confidence data raised expectations of
better economic times later in the year, traders say. The long bond's price
is up 15/32 to yield 5.82%. (MSD)
11:34 (Dow Jones) Jeffrey Applegate of Lehman Brothers ups his year-end
price target for the S&P 500 to 1450 from 1400 and for the Dow to 12250 from
11500. The reason? The stock market acts in anticipation of improvement, and
expectations for 2002 earnings are bottoming out and should soon start to
head higher, Applegate says. (KJT)
11:30 (Dow Jones) Centillium Communications (CTLM) shares plunged more than
20% after Salomon Smith Barney downgraded the stock to neutral from
outperform. Salomon analyst Clark Westmont cited concern that Alcatel's
(ALA) potential buy of Lucent (LU) will take away revenue from Centillium,
which provides broadband networking systems. (SPJ)
11:16 (Dow Jones) Inflation got you down? Don't worry, says Christine
Callies, chief investment strategist at Merrill Lynch. "Share prices can
advance concurrent with inflation if the greater fear is economic weakness
or decay in corporate profit growth," Callies says. In other words,
inflation may be the lesser of three evils. (KJT)
(END) DOW JONES NEWS 05-29-01
01:55 PM
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