The forecasts grew but gloomier.. but on a background of hope.
Stocks Off As Gurus Turn Sour on Earnings
July 30, 2001 04:54 PM ET
By Haitham Haddadin
NEW YORK (Reuters) - Stocks fell in dull trade on Monday as three of Wall Street's top strategists cut their year-end profit estimates for America's biggest companies, underscoring investors' worries over sagging corporate earnings in a sluggish economy.
"We think a very cautious approach to the U.S. equity market makes a lot of sense until there are unambiguous signs of a real earnings recovery," J.P. Morgan Chase & Co.'s chief portfolio strategist Doug Cliggott told clients in a note.
Cliggott, the only major pundit to forecast last year's broad market decline, cut his 2001 year-end target for the Standard & Poor's 500 Index .SPX to 1,100 from 1,200 -- 8.6 percent below current levels. UBS Warburg's Ed Kerschner and Credit Suisse First Boston's Tom Galvin also trimmed their 2001 outlook for the S&P 500.
A dearth of economic data or key corporate earnings reports left trading volumes among the lightest this year in a session typical of what are often called the dog days of summer. Major market gauges moved sideways most of the day before slipping into negative territory.
"The biggest thing on investors' minds is how busy the golf course is, where the nicest vacation is ... " said Jim Oberweis, president of Oberweis Asset Management, which oversees $300 million, referring to the dull trade. "Investors are pretty well cognizant of the fact that earnings for the second quarter were not good. I wouldn't be surprised to see the third quarter even more difficult than the second quarter was."
Tuesday, in contrast to Monday, is chock full of economic data that could influence trade. The reports include personal income for June, weekly retail sales and consumer confidence for July.
The Nasdaq Composite Index .IXIC, which is dominated by technology stocks, lost 11.23 points, or 0.55 percent, to 2,017.84 and the Dow Jones industrial average .DJI, a gauge of 30 blue-chip corporate icons, fell 14.95 points, or 0.14 percent, to 10,401.72. The broader Standard & Poor's 500 Index .SPX slipped 1.30 points, or 0.11 percent, to 1,204.52.
Trade volumes, just shy of 881 million shares on the New York Stock Exchange and 1.29 billion shares on Nasdaq, were among the lightest this year on both markets.
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Investors are waiting for signs that the Federal Reserve's six interest-rate cuts this year are adding momentum to the nation's sluggish economy. The central bank meets on Aug. 21, when it is widely expected to cut rates for the seventh time this year in a bid to revitalize the world's largest economy.
The weakness in the market "represents a lack of conviction," said Richard Cripps, chief market strategist at Legg Mason Wood Walker. "At some point, the confidence level in forward earnings and in the economy will have improved, but you don't know when that will be until after it has happened."
Some 80 percent of the S &P 500 companies have posted quarterly results so far, offering few hints of a pick-up in corporate earnings.
Tyson Foods Inc. fell after the largest U.S. poultry producer said quarterly earnings dropped sharply, as expected, pressured by weak foreign currencies and promotional expenses in a tough market. Shares fell 52 cents, or 5 percent, to $9.88.
Humana Inc. added 83 cents to $10.13, for a gain of 8.92 percent, after the top health insurer said earnings rose 32 percent due to higher premiums, despite a drop in revenue.
reuters.com |
