MARKET TALK: Strange Day For Stocks, But We'll Take It
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
4:04 (Dow Jones) Half-decent, not to mention strange, day for stocks. What
looked like early weakness never developed, and big rally failed midday. But
major indexes manage to post gains despite some troubling tech news. Big Mo,
GE, H-P, Microsoft and Intel best gainers on Dow, Honeywell again the
weakest link. Data, in form of leading indicators, show encouraging strength
- maybe we get both half-point cut next week and ongoing signs that economy
bouncing. It's a nice thought, at least. DJIA up 51 to 10648, Nasdaq adds 38
to 2031, and S&P 500 climbs 10 to 1223 (preliminary). (TG)
3:56 (Dow Jones) Nymex crude and products took a drubbing after data showed
continued growth in gasoline and distillate inventories, largely easing
concerns about tight supplies and price spikes. July crude dropped $1.38 on
expiry to $26.10/bbl, the lowest level for nearby crude since early April.
August crude fell $1.19 to close at $26.45. Gasoline's losses were even
steeper, with July plunging to a 3 1/2 month low of 78.60c/gal before ending
down nearly 6c at 79.40c. (MXF)
3:41 (Dow Jones) Sen. Phil Gramm, R-Tex., says he's "troubled by the
decision of the European antitrust division to question the GE-Honeywell
merger. Even though I understand that the domicile of a big international
company is not as relevant as it once was, by traditional definitions, these
are both American companies." (JCC)
3:33 (Dow Jones) The spat between Boeing (BA) and Airbus over who's leading
the plane-making market continued in Paris as Boeing received its first jet
order at the air show. The order for three 777 jets is worth about $525
million. Airbus, meanwhile, got an order for 20 A318 planes, bringing its
order tally at the show to 175, worth nearly $14 billion. Boeing said it's
the deliveries, not orders, that count, and that it still delivers 61% of
airplanes. A chief designer at Airbus, which claims a 50%-plus market share
in terms of the value of orders, told The Wall Street Journal that the head
of Boeing's commercial aircraft business is "in a state of denial." (SON)
3:24 (Dow Jones) Can music soothe the savage investor? Two newspaper
publishers tried to assuage the furrowed brow of Wall Street this week with
references to music. Sure, newspaper publishers have been hit hard by
declining rates in ad revenue growth and job cuts, but who cares when Petula
Clark is singing, "It's a sign of the times that you tell your friends that
I'm your one and only," as she did in a recording used during an animated
presentation for New York Times (NYT) during this year's Mid-Year Media
Review? Also blowing in the wind: McClatchy (MNI) CEO Gary Pruitt quoted Bob
Dylan in an effort to get investors to look beyond the industry's current
woes. "Stake my future on a hell of a past," said Pruitt, lifting a stanza
from the Dylan tune "Silvio," "At this point," he joked to the crowd, "I'd
like to play the harmonica." Sounds better than what the Street's been
hearing from this crowd. (BS)
3:04 (Dow Jones) Despite Tuesday's discouraging reversal, there are some
good technical signs, says Hilliard Lyons' Dick Dickson. The firm's momentum
model is getting closer to oversold extremes, which are usually associated
with important market lows. And the readings extend beyond just price
momentum. The 10-day moving average of advancing vs. declining volume, for
one, is at levels last seen at the April lows and before that at the October
1998 low. "In sum, while the current market action is ugly, we think that a
sustainable low is close at hand," he says. (TG)
2:47 (Dow Jones) The 30-year is off its high after as-expected Treasury
budget numbers. Some were concerned that the numbers would have been a bit
higher, signaling the possibility of higher debt issuance down the road,
says Lehman Brothers' Drew Matus. The long bond up 8/32 to yield 5.67%.
(AEG)
2:35 (Dow Jones) Sen. Paul Sarbanes, D-Md., the new chairman of the Senate
Banking Committee, says "I think the banking industry is better situated
today to withstand the softening of the economy than it has been in the
past." (JCC)
2:24 (Dow Jones) Most money managers are betting on a 50 BP Fed rate cut,
according to the latest Ried, Thunberg poll. Sixty percent of 151
respondents see the 50, with the remainder sticking to the 25 BP that meets
most primary dealers' expectations. (MSD)
2:12 (Dow Jones) The low in Sept Nasdaq is key, floor traders say. It's near
Tuesday's low and traders say sell stops are likely building in that area. A
move under 1571 could trigger further selling. (DMC)
2:08 (Dow Jones) More gloominess from MSDW's Stephen Roach, who says in
latest missive, "America's downshift has dealt a harsh blow to the broader
global economy. And the sudden and abrupt deterioration in the external
climate is likely to put further pressure on the United States." (JCC)
1:57 (Dow Jones) No contest in race for today's best-performing group - home
construction is running away with it. Lennar's (LEN) 2Q numbers and the
company's outlook have the sector up 6.5% all told. In fact, of the group's
11 members, nine are up more than 5%, with Lennar up nearly 10%. The group's
one-year return of 93% is the best of all Dow Jones industry groups during
that time. (TG)
1:41 (Dow Jones) Declining profit margins are likely to remain on the menu
for both casual-dining and fast-food chains the rest of the year, says J.P.
Morgan's John W. Ivankoe. Higher labor costs will be matched by rising
utility and beef bills, he says. Still, the analyst sees 2.5%-3% increases
in same-store sales as achievable for full-service operators, as busy
lifestyles and an aging population make dining out de rigueur. He rates
Darden Restaurants (DRI) and Wendy's International (EAT) as buys. (RLG)
1:28 (Dow Jones) GKST economist Brian Wesbury says "we continue to believe
that the U.S. is currently in a recession and that any rebound is unlikely
until early 2002." (JCC)
1:25 (Dow Jones) USD/JPY trend higher is accelerated by Nikkei report that
Bush adviser Lindsey told a Japanese daily that yen weakening is okay as
long as it comes from structural reforms and not manipulation. Pair is now
at Y123.90. At high above Y124, dollar was up nearly 1 1/2 yen from intraday
low. EUR/JPY gaining also, helping EUR/USD to $0.8540. (JEN)
1:21 (Dow Jones) Everybody in the bond market is upbeat about Lehman (LEH)
debt after the firm turned in stellar 2Q earnings. The fixed income market -
which saw secondary market prices rise even as new issuance skyrocketed in
2Q - gets much of the credit for Lehman's performance. (CSE)
1:12 (Dow Jones) A big trade went down in Oracle's (ORCL) calls - or did it?
Option investors who thought they saw more than 50,000 contracts of Oracle's
December 20 calls trade Wednesday morning turned out to be mistaken; the
large trade that showed up on many computer screens was the result of a bad
print, confirmed a trader at Letco, the designated primary market maker for
Oracle options at the CBOE. (KT)
1:08 (Dow Jones) Sen. Phil Gramm, R-Tex., after quoting "a famous oracle" on
the subject of irrational exuberance in the equity market, says "anything
irrational ultimately has to come to an end." (JCC)
1:00 (Dow Jones) Fed Gov. Gramlich says personal saving is vital for U.S.
households to maintain their standard of living, and more work should be
done to help consumers improve their financial outlook. He makes no mention
of monetary policy or general economic conditions. (FL)
12:56 (Dow Jones) Merrill Lynch analyst Roberta Goodman said she expects the
U.S. Senate to vote tomorrow to proceed on patients' rights legislation
proposed by Senators Kennedy and McCain that would allow patients the right
to sue their health insurance provider in federal court. After the vote
tomorrow morning, debate on the bill should proceed and the amendment
process begin with Senate Republians offering the first change around noon,
Goodman said. The amendment process is critical in determining what
legislation finally emerges from the Senate, and Democrats may not be able
to block changes that weaken the Kennedy-McCain bill, she added. (JJO)
12:51 (Dow Jones) House Financial Services Chairman Oxley, says "the
California energy crisis is not only bad for California, it's bad for
America. There is no question that when a state must issue the largest
municipal bond offering in history in order to purchase electricity, there
is something seriously wrong with the system." (JCC)
(END) DOW JONES NEWS 06-20-01
04:03 PM
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