MARKET TALK: Stocks Fight, But Can't Stretch Gains
26 Feb 16:04
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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4:04 (Dow Jones) When compared with recent action, Tuesday's session looks
pretty tame, even with the midday gyrations. Doesn't the DJIA close up or down
by 100 points or more every day? Confidence slipped, and Irag rumors found
their way back into stocks. Greenspan, durable goods and new home sales all in
play Wednesday, and a little weakness given latest strength in overall market
is OK. Meanwhile, the Senate panel talking to Enron's Skilling somehow makes
him look almost sympathetic and themselves, well, like something else. Volume
light. DJIA eases 31 to 10114, Nasdaq Comp edges down 3 to 1766, and S&P 500
flat at 1109 (preliminary). (TG)
3:50 (Dow Jones) Gap (GPS) is probably the biggest of the bunch reporting
tonight, though it's joined by a few well-known names: AutoZone (AZO), Clear
Channel (CCU), Global Crossing (GBLXQ) and Asia Global Crossing (AX), Pall
Corp. (PLL), and Papa John's (PZZA). (TG)
3:41 (Dow Jones) ADC Telecommunications (ADCT) was one of the few highlights
in options trading, its puts the most heavily traded by a large margin. A
whopping 170,945 contracts of ADC's April 2.50 puts traded at the ISE, where
the trade was facilitated. By selling April 2.50 puts, investors earned about
$10 a contract and either do not expect ADC stock to fall below $2.50 by
mid-April or are willing to buy stock at that price. ADC stock most recently
was up 17 cents to $3.92, but is off more than 30% since its early-January
price. (KT)
3:34 (Dow Jones) Starbucks (SBUX) will report its February comps on Thursday.
WR Hambrecht looks for 3% rise, on top of increase of 6% in same period a year
ago. Keeps buy rating, and remains confident in its March quarter estimates.
SBUX up 0.4% at $22.24. (TG)
3:29 (Dow Jones) The U.S. Senate isn't likely to take up trade promotion
authority for at least another month, Senate Finance Chairman Max Baucus,
D-Mont., said Tuesday. The legislation isn't likely to come up for debate until
mid-April after a two week congressional recess for Easter. (MHA)
3:16 (Dow Jones) Major averages are doing their darndest to get back on the
good side. While there are many more losing groups than gainers, broader market
averages have come back from morning losses, and appear set to add to recent
gains. The huge day for economy watchers tomorrow will certainly influence
stocks in some way, not unlike the confidence reading earlier. Gold, airlines,
and transportation provide some support, while wireless, Internets, and semis a
drag. DJIA flat at 10144, Nasdaq Comp adds 7 to 1777, and S&P 500 climbs 4 to
1113. Little volume to speak of. (TG)
2:56 (Dow Jones) The third of Tyco's (TYC) recently started weekly conference
calls to address accounting issues appears to be another uneventful one,
Merrill says. Firm says Tyco continues to make available info that most
companies do not. Merrill believes shares are sharply undervalued, as potential
valuation of Security & Electronics could be worth the current market price of
Tyco. Shares up 1.7% at $30. (TG)
2:47 (Dow Jones) Nymex crude surges $1 a barrel to $21.57 on expectations of
a drawdown in inventories in industry and government reports late Tuesday and
early Wednesday, along with jitters over Iraq. Rumors of U.S. troop presence in
Iraq made the rounds for the second time in a week, causing some jitters in the
market. Pentagon denied the rumor. Some see swollen inventories headed lower,
finally showing output cuts undertaken by OPEC and other producers. However,
IFR Pegasus analyst Tim Evans notes that the negative April-May Nymex spread
shows signs of weakness, suggesting that inventories may have actually grown in
the past week. (BWH)
2:34 (Dow Jones) Owosso (OWOS) withheld performance-based bonuses from
executive management in 2001 because the company failed to achieve its
objectives, but granted the four executives a "stay bonus" of up to $101,505
each. Three of the four executives who got the stay bonuses no longer work at
Owosso. Owosso also disclosed that it agreed to pay the three executives their
2001 salaries and other benefits for about nine months after their
resignations. Owosso didn't say why it paid the stay bonuses. Company officials
didn't immediately return a phone call seeking comment. (RG)
2:15 (Dow Jones) Helmerich & Payne (HP) may see a loss of between $2 million
and $3 million from foreign exchange during the second quarter, ending March
31, due to the devaluation of the Venezuelan bolivar. On Feb. 13 the Venezuelan
government abandoned its exchange rate policy and allowed the bolivar to float
against the U.S. dollar. The bolivar's value has been "extremely volatile"
under the new plan and has seen as much as a 30% devaluation from before the
new policy. HP off 1.3% at $33.29. (TAG)
2:05 (Dow Jones) Even the experts got stung by Enron (ENRNQ). Former
Financial Accounting Standards Board chairman Dennis Beresford testified
Tuesday that he lost $7,000 buying Enron stock, which he blames on "my own
stupidity." (JAB)
1:59 (Dow Jones) Moody's says credit losses due to defaults reached record
levels in 2001, as default rates on speculative-grade bonds surged and recovery
rates on defaulted bonds fell for the third straight year. The global
speculative default rate almost doubled in 2001, reaching a 10-year high of
10.2%, from 2000 levels. At 21 cents on the dollar, the average recovery rate
in 2001 was down from 25 cents in 2000, and well below the average recovery of
40 cents on the dollar over the last 20 years. (MCG)
1:43 (Dow Jones) Alliance Medical received clearance from the FDA for three
premarketing notifications for reprocessed medical devices, but no word about
its IPO, which still hasn't priced. Underwriters set the range for the 4M-share
offer at $14-$16 back in November and the pricing, once scheduled to be the
first of 2002, was set to take place in late January. (CRW)
1:27 (Dow Jones) If Fed Chairman Greenspan comes out and talks about
accounting practices in his House testimony Wednesday, the Treasurys market
will have a good bid to it, says one bond trader in NY. If Greenspan just talks
about the economy, however, Treasurys may not do so well, trader expects. (JNP)
1:23 (Dow Jones) Did they really need the two beers? A handful of investment
bankers are out at Barclays Capital after ringing up a dinner tab of better
than $62,000 last year, according to published reports. Five of the six were
fired, with some trying to charge the dinner to clients. The group ordered five
bottles of wine (at $17,500, $16,500, $13,400, $13,100, and $2,000 each), six
glasses of champagne ($80), 10 bottles of water ($50), two bottles of beer
($10), a pack of smokes ($7), and a glass of juice ($4). The NY Times reports
that the owner of the joint, Petrus, one of London's best, was so moved by the
display of excess that he provided the food gratis. (TG)
1:02 (Dow Jones) UPS 2Q consensus is likely to come down after the company
said it expects 2Q EPS to be between 50c-55c, compared with the current view of
55c. A number of analysts whose estimates are above 55c will slash them,
bringing down the consensus, predicted Donald Broughton at A.G. Edwards & Sons.
Moreover, UPS' 2H projection for earnings increases in the low-teens may prove
to be too optimistic if shippers begin to take business elsewhere in the event
the company's contract talks with the Teamsters union drag on toward the July
31 expiration date, Broughton said. On the bright side, the package delivery
company appears to have done "a phenomenal job of cost control," he said. UPS
shares are up 78 cents, or 1.4%, at $57.88. (SON)
12:49 (Dow Jones) With DJIA still down, but off its lows, Tsys are losing
ground now across the curve. 10-year yieldup 5 BP at 4.90%, price down 13/32.
two-year losing ground Tuesday as traders prepare for $25B of supply in form of
auction to hit the market Wednesday. Two-year yield up 4 BP at 3.01%, price
down 2/32 at 99 31/32. (JNP)
12:41 (Dow Jones) Merrill has done some research showing credit card
valuations have tended to drop about 2-4 months in advance of Fed rate hikes,
though they typically recover and continue to expand 1-4 months thereafter if
the market believes future rate hikes, if any, will be modest and limited. The
firm's research also shows that "valuations have tended to fall apart when the
market cannot discern an end to a period of Fed tightening." Merrill also
points out that while card stocks tend to move with rate moves, there has been
little impact to earnings during rate moves. (TG)
12:26 (Dow Jones) USD/JPY is again moving higher, bouncing over Y134.50, as
traders remain unconvinced that the Japanese authorities will be able to win
the market's confidence with Wednesday's economic package. EUR is $0.8655;
USD/JPY is Y134.64; EUR/JPY is Y116.58. (JRH)
12:18 (Dow Jones) Yellow Corp. (YELL) will record a non-cash charge of $75.2
million in the first quarter of 2002, which will be reflected as a cumulative
change in accounting principle. Yellow adopted the new accounting rule
regarding amortization of goodwill. Under the new rule, goodwill will no longer
be amortized automatically on a regular basis, but it must be periodically
tested for impairment. Yellow currently has about $102 million of goodwill on
its balance sheet, including $75 million remaining from its 1999 acquisition of
Jevic Transportation Inc. YELL up 1.6% at $23.99. (BC)
(END) DOW JONES NEWS 02-26-02
04:04 PM |
