Close Dow +36.88 at 10235.17, S&P +0.94 at 1126.34, Nasdaq +5.40 at 1789.75: If you were stuck watching the action in the equity market today, you probably caught yourself dozing a few times, because the action for most of today was about as exciting as watching an ice dancing competition... Nonetheless, one had to be somewhat impressed at the market's performance as the major indices managed to finish with modest gains despite having to digest another round of earnings warnings and a seemingly disappointing initial claims report... The earnings warnings that generated the most headlines today came from Bristol-Myers (BMY -5.55) and Check Point Software (CHKP -5.39)...
Although each company had its own reasons for its impending disappointment, investors were affected all the same as those warnings fed concerns about the strength, and timing, of a rebound in corporate profits... The unexpected surge in initial claims for unemployment benefits in the week of March 30 also played into those concerns; however, the 64K increase in claims to 460K (consensus 380K) was attributed to federal extension filings... As such, there was some relief that the increase was really a reflection of a legislative change rather than an economic change...
That point notwithstanding, the market struggled to make much headway today as earnings concerns continued to weigh on the proceedings... It wasn't all bad today, though, as the market did take some comfort from a speech by President Bush who called for Israel to end its military incursions on West Bank and assigned Sec. of State Colin Powell the task of going to the Mideast to seek a cease-fire...
Hopeful that progress will soon be made on that front, investors found it safe to do some bargain hunting in several stocks that had been weak of late on the back of concerns surrounding the escalating tensions in the Middle East... One group that did particularly well was the transportation sector, which gained ground as crude prices fell in the wake of the president's speech... Earlier in the session, crude futures were as high as $28.35, but they ended the day down $0.98 at $26.58/bbl... Other standouts in the market included the retail and consumer goods issues... Conversely, some of the weakest performers were the drug, software, homebuilding, oil, oil service, and chemical shares...
The latter fell in response to Merrill Lynch downgrading a number of chemical stocks on valuation concerns and an increased likelihood that earnings will disappoint later this year due to rising energy and raw material costs... It is worth noting that while the market traded up in the early part of the session, the indices were each showing modest losses heading into the final half hour of trading... The late rush of buying interest was driven by an improvement in the semiconductor stocks and the Dow's resolve to hold above the 10,200 level, which marks the lower end of a range it has been trading in since early-March... Tomorrow, look for the market to take its cue from the March employment report...DJTA +1.3%, SOX +1.2%, XOI -2.3%, NYSE Adv/Dec 1726/1395, Nasdaq Adv/Dec 1780/1688 |
