M A R K E T .. S N A P S H O T -- Techs regain their footing
Productivity up a nifty 3.5%
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 9:51 AM ET Feb 6, 2002
NEW YORK (CBS.MW) -- U.S. shares opened on a higher note Wednesday, with strength emerging in both the tech sector and broad market.
The Dow Jones Industrial Average ($INDU) climbed 44 points, or 0.5 percent, to 9,729.
The Nasdaq Composite ($COMPQ) climbed 7 points, or 0.4 percent, to 1,844 while the Nasdaq 100 Index ($NDX) rose 9 points, or 0.6 percent, to 1,471.
The Standard & Poor's 500 Index ($SPX) edged up 0.3 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks lost 0.2 percent.
Volume came in at 119 million on the NYSE and at 204 million on the Nasdaq Stock Market. Market breadth was negative, with decliners outpacing advancers by 12 to 11 on the NYSE and by 14 to 11 on the Nasdaq.
Sector and specific action
Networking behemoth Cisco Systems (CSCO) jumped after revealing that its fiscal second-quarter results would exceed Wall Street's current consensus estimate on both earnings-per-share and revenue. Thomson Financial/First Call expects EPS of 5 cents in the second quarter. The company also informed investors that booked orders for the quarter ending January amounted to $3.9 billion, above its target of $3.75 billion.
Cisco's disclosure came after an internal memo on its fiscal 2002 results was prematurely and inadvertently distributed to a large number of employees after the close of trading on Tuesday. The company's fiscal second-quarter results are still expected to be released after the close Wednesday. Cisco said it disclosed the internal distribution to minimize potential confusion.
The networking sector ($NWX) rose after coming under vigorous selling pressure over the past four trading days as Cisco gained 2.2 percent.
Also helping to assuage nerves was Tyco's (TYC) near 9-percent rally. The company disclosed that it would hold a conference call at noon ET to provide an update on its financial position and business outlook. Separately, a Wall Street Journal report said Tyco may decide to sell its Tyco Capital unit for as much as $12 billion.
Computer Associates (CA) plunged 16 percent after responding to a move from rating agency Moody's Investors Service late Tuesday to place the software company's credit ratings on review for possible downgrade. CA said it was "surprised and disappointed" with the action and sought to reassure investors by reaffirming its fiscal fourth-quarter financial targets. The company affirmed its outlook of $770 million in revenue for the fourth quarter and an operating loss-per-share of 4 to 5 cents.
Gold futures and gold stocks continued to trek higher following Tuesday's smashing performance. The futures markets jumped $1.20 to $300.30 on the back of a $9 advance on Tuesday.
In the bank sector, Allied Irish Banks (AIB) suspected a fraud totaling $750 million at its Baltimore subsidiary hit the wires. A rogue trader in the foreign exchange division is believed to be at the center of the probe.
Treasurys wilt
Government bonds were a whisper lower as stocks exerted some influence by opening on a higher note.
The 10-year Treasury note was off 3/32 to yield ($TNX) 4.91 percent while the 30-year government bond climbed 7/32 to yield ($TYX) 5.36 percent.
While not many economic reports are lined up for this week, one worth delving into is the fourth-quarter productivity report. It rose 3.5 percent in the fourth quarter vs. the expected 3 percent increase and more than double the 1.5 percent gain in the third quarter. Productivity has held up amazingly well during the current recession, helping to keep inflation under wraps. and check economic calendar and forecasts.
And more headway on the productivity front is expected as the economy regains its footing.
"With output likely to rise by at least 2 percent, productivity will continue to rise rapidly -- we expect at least 4 percent year-over-year by the end of this year," commented Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The economist pointed out the unexpected fall in unit labor costs thanks to a dramatic slowing in gross compensation, which saw the smallest rise since the second quarter of 1997. "Good news for margins -- costs are falling faster than prices -- and for inflation."
The second leg of Treasury's refunding auction will take place in the afternoon, with $13 billion in 10-year notes on the plate. Supply may weigh on long issues as investors work to absorb the additional securities.
In the currency sector, the dollar fell 0.1 percent to 133.75 yen while the euro edged down 0.3 percent to 86.46 cents. |
