MARKET TALK: As February Starts, No Bull Market Yet
01 Feb 11:12
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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11:10 (Dow Jones) Look for the weak seasonal trends of February to make their
presence felt, Lehman's Jeff deGraff says. There's still too much complacency
to suggest the bear is dead. The breadth figures haven't been strong enough to
say a long-term shakeout has taken place, ushering in a secular bull market.
That said, he does believe the aerospace and defense areas, where relative
performance has been good, have more room to move up. (TG)
10:59 (Dow Jones) Kmart (KM) was driven into bankruptcy when its suppliers
grew impatient about past-due payments and stopped shipping to its stores. But
while Kmart's fall was sudden, a general impatience for payments on receivables
isn't new, says David Huebner, president and CEO of D&B Receivable Management
Services. "This is part of a broader phenomenon that's developed over the past
four quarters," Huebner says. Worried about bankruptcies and defaults, clients
are seeking twice the amount of help they were last year to collect on accounts
less than six months old, Huebner says. But D&B data shows that the trend may
have found a bottom - an indication that the economy may have recently found a
bottom, too, Huebner says. In the meantime, watch out for a few more "lagging
indicators" - bankruptcies, that is. (JMC)
10:49 (Dow Jones) The Economic Cycle Research Institute's weekly leading
index increased for a fourth-straight week in the week ended Jan. 25. The most
indicative measure is the percentage change in the index from its 52-week
moving average. This had been negative from September 2000 through all of last
year, but moved into positive territory in the week ended Jan. 4 and has moved
higher each week since. It was up 2.1% in the latest week. (JM)
10:42 (Dow Jones) It seems Wall Street is still trying to make up its mind
about the earlier data. That, or folks are just resting following the big gains
of the past two sessions. Stocks have shown virtually no reaction to the big
numbers out this morning, most of it fairly encouraging. Pollution control
names are getting battered on Waste Management's weak 4Q outlook, while
biotech, precious metals and mining are the day's best performers. DJIA flat at
9918, Nasdaq flat at 1934, and S&P 500 off 3 at 1126. (TG)
10:31 (Dow Jones) U.S. Labor Secretary Chao says January unemployment report
suggests the economic outlook is improving. "I am cautiously optimistic about
the economy. I think it is bottoming out, but these numbers are not
conclusive," she says. The report showed the unemployment rate fell
unexpectedly to 5.6% as employers cut fewer jobs than they did in December.
(JVR)
10:19 (Dow Jones) A California judge on Jan. 18 issued a proposed decision in
the California PUC's ongoing proceedings to determine rates for bankrupt
utility Pacific Gas & Electric's generation facilities. The judge's proposed
decision would establish interim cost-of-service revenue requirements for the
costs incurred by Pacific Gas associated with its generation assets and power
purchased from third parties. The revenue requirement would be calculated based
on actual incurred costs. The judge's decision proposed an interim 2002 revenue
requirement of $2.875 billion for Pacific Gas, including fuel costs and
purchased power costs. PG&E (PCG) shares off 1% at $21.27. (BB)
10:04 (Dow Jones) The Institute of Supply Management (formerly NAPM)
manufacturing purchasing managers' index moved up to 49.9 in January from 48.1
the prior month. 50.0 is the threshold between an increasing and contracting
manufacturing sector. This number is just below the threshold, but the
components for new orders (55.3) and production (52.0) were above. (JM)
9:56 (Dow Jones) Morgan Stanley upgrades Micron Tech (MU) to outperform from
neutral, saying demand for DRAM is "much stronger" than expected. Analyst John
Cross said that if contract prices hold at $3.00, Micron could return to
profitability in the May quarter. Cross expects supply of DRAM to be tight in
2002 and 2003. Micron holds an analyst meeting later Friday. Shares up 2.5% at
$34.60. (DLF)
9:48 (Dow Jones) Perrigo (PRGO) received $7.8 million net of attorney fees
and expenses from settlement agreements with certain defendants of a civil
antitrust lawsuit. The company will record the pretax gain for the quarter
ending March 31, boosting its quarterly income by about $5 million, or 7 cents
a share. The suit was filed by Perrigo in August 1999 in Michigan against a
group of vitamin raw material suppliers alleging the defendants conspired to
fix the prices of vitamin raw materials sold to the company. Shares flat at
$12.90. (DL)
9:40 (Dow Jones) Solid-waste companies earnings are on shaky ground. Two days
after Republic Services (RSG) issued lower-than-expected 4Q earnings, industry
giant Waste Management (WMI) lowered its 4Q guidance, underscoring the impact
the slowing economy is having on wastes volumes. As if to separate itself from
the pact, Allied Waste Industries (AW) reaffirmed its 2001 guidance of $1.930B
and $1.940B of adjusted EBITDA early Friday. (CCW)
9:31 (Dow Jones) Lucent (LU) is seeking to force Global Crossing (GBLXQ) to
either assume or reject certain pre-petition contracts by Feb. 14. Lucent,
which provides communications networks and other goods and services to Global
Crossing under several contracts, said the company owes it far more than the
$31.36 million unsecured trade claim listed in Global Crossing's Chapter 11
petition. About $83 million of accounts receivable are already due and payable
under the contracts, Lucent said. Lucent also said there is work in progress
and goods and services provided but not yet billed under the contracts and
other purchase orders, which have a total estimated value of $40 million. (CM)
9:24 (Dow Jones) Investors Bank and Trust's Tim Mazanec suggests the fx
market will read the jobs report as negative until further data come out, due
to the bigger-than-expected drop in nonfarm payrolls. But the dollar was
steadily losing ground against the European currencies well before the data,
and that pattern is continuing, with the dollar at intraday lows vs euro, Swiss
franc, pound. Look to ISM and Michigan at 10 a.m. for a more definitive
response. (JEN)
9:18 (Dow Jones) While the CEO of Symantec (SYMC) warns that valuations of
some of his competitors - which can range from 60 to nearly 100 times earnings
- are too rich, he maintains that Symantec is undervalued. Trading at about 27
times its 2003 earnings estimate, company officials argue that the shares
warrant a P/E closer to 35 times, given Symantec's leadership position. (MLP)
9:10 (Dow Jones) Morgan Stanley out with a January recap of retail specialty
stores. Overall, mall traffic looked weak in two malls visited, while Fall
inventories appeared depleted and level of clearance merchandise was low. Firm
sees same-store sales decline of 5%-7% for specialty apparel retailers in
January. Initial Spring merchandise looks good. Top picks are Abercrombie &
Fitch (ANF), American Eagle (AEOS), and Ross Stores (ROST). (TG)
(END) DOW JONES NEWS 02-01-02
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