From Briefing.com: General Commentary - Stocks were put on the defensive early on, as Consumer Confidence report showed confidence plunging to its lowest level in nearly a decade. Reading of 79.4 marked the fifth consecutive time data fell well shy of street expectations. Though there really isn't much correlation between the Consumer Confidence numbers and consumer spending, investors were spooked nonetheless by the extremely negative headline.
Tech sector among the hardest hit, as data rekindled talk of a double-dip. Slow to sluggish economic growth would bode poorly for tech sector starved for increased IT spending; without which an earnings rebound is the stuff dreams are made of.
Sensitivity to economic data/outlook likely to dominate trading for balance of week given upcoming GDP, Claims and Employment reports... See Briefing.com's Economic Calendar for details... About the only positive coming from the disappointing data is increased likelihood of another rate cut next week.
However, Briefing.com notes that at some point Fed will be merely pushing on a string, as additional easing of 25 basis points unlikely to alter macro-economic picture. About the only way in which another rate cut helps the market is by improving psychology. And benefit from any such change is apt to be short-lived, especially if a slower economy translates into reduced IT spending, which translates into a longer wait for earnings recovery.
Robert Walberg, Briefing.com
7:00PM Thursday After Hours price changes vs 4pm ET levels: Not a great deal of disruption in the after hours trade as the bullish bias seen late in the regular session has persisted. Presently, the S&P futures, at 884, are 1 point above fair value while the Nasdaq 100 futures, at 969, are 6 points above fair value. The positive disposition stems, in part, from the optimism surrounding the market's strong finish and a lack of any major earnings surprises after the bell.
Elsewhere, Maxim Integrated Products (MXIM 30.30 +0.87) matched the consensus EPS estimate for its fiscal first quarter, and although the semiconductor company guided fiscal Q2 (Dec) revenues lower, it offset that disappointing news with an acknowledgment that it expects fiscal Q2 bookings to be higher than Q1 and EPS to be slightly above the $0.22 it earned in Q1. The current Multex consensus estimate for the Dec. quarter is $0.23.
5:40PM Maxim stresses limited visibility and cost-cutting measures (MXIM) 29.43 -1.06: -- Update -- Company continues to stress their lack of "any visibility" into end market demand .. in a separate note, CEO John Gifford announced that, starting in FYO4 (June), he plans on taking no salary with all vice presidents volunteering to take a 30% pay cut.
5:29PM Maxim Integrated lowers Dec qtr revenue outlook; EPS in-line (MXIM) 29.43 -1.06: -- Update -- On conference call, company puts Q2 (Dec) earnings slightly above Q1 EPS of $0.22 and revenues equal to Q1 levels of $285.9 mln .. Multex consensus estimates are $0.23 and $298.7 mln .. Management expects higher bookings in Q2 versus Ql .. lowers FY03 (June) capex spending to $70-80 mln from $90 mln in FY02.
4:03PM Maxim Integrated matches estimates (MXIM) 29.43 -1.06: Reports Q1 (Sep) earnings of $0.22 per share, in line with the Multex consensus of $0.22; revenues rose 19.4% year/year to $285.9 mln vs the $288.0 mln consensus.
4:41PM Ingram Micro beats by 2 cents, guides above consensus (IM) 13.36 -0.59: Reports Q3 EPS of $0.13, $0.02 better than the Multex consensus; revs were $5.60 bln, vs consensus of $5.48 bln. Expects Q4 EPS of $0.17-$0.19 on revs of $5.75-$5.90 bln, vs consensus of $0.16 and $5.77 bln.
4:39PM Skyworks tops estimates (SWKS) 5.76 -0.04: Reports Q4 (Sep) loss of $0.03 per share, $0.05 better than the Multex consensus of ($0.08); revenues rose 51.6% year/year to $150.7 mln vs the $149.8 mln consensus; expects to deliver "at least 5 percent sequential revenue growth in the December quarter" -- Multex consensus estimate is for revs of $157.2 mln.
4:31PM Integrated Silicon beats by 2 cents (ISSI) 3.18 +0.02: Reports Q4 (Sep) loss of $0.32 per share, $0.02 better than the Multex consensus of ($0.34); revenues rose 36.5% year/year to $20.2 mln vs the $19.8 mln consensus.
4:22PM Sanmina-SCI meets estimates, guides below consensus (SANM) 1.98 -0.11: Reports Q4 (Sep) earnings of $0.02 per share, in line with the Multex consensus of $0.02; revenues rose 10.0% year/year to $2.60 bln vs the $2.63 bln consensus. Expects Q1 EPS of $0.00-$0.02 on revs of $2.3-$2.6 bln, vs consensus of $0.04 and $2.8 bln.
4:19PM Amkor beats by 6 cents (AMKR) 3.28 -0.13: Reports Q3 (Sep) loss of $0.29 per share, $0.06 better than the Multex consensus of ($0.35); total revs were $454 mln, vs consensus of $423 mln.
4:08PM JNI Corp misses estimates (JNIC) 2.45 -0.08: Reports Q3 (Sep) loss of $0.22 per share, $0.02 worse than the Multex consensus of ($0.20); revs were $7.1 mln, vs consensus of $10.6 mln.
1:57PM Message of the Markets : Quite frankly the market is afraid of a double-dip. Might not be logical when looking at the full body of the economic data, but in the aftermath of last week's soft Durable Goods data, and this morning's much weaker than expected Consumer Confidence report, it's understandable. Market's anxiety over the state of the economy can be seen in sector action, as economically sensitive groups such as machinery, chemicals, paper, rail, airline and retail among the day's worst performers.
Not surprisingly, money rotating into more defensive industries. Outperformers include non-durable household product, defense and gold stocks. With the employment data staring investors in the face (due for release on Friday), concern over the economy likely to dominate trading for next few days. Consequently, expect money to continue flowing into the more defensive, less economically sensitive issues over short-term.
Unfortunately, it will be difficult for the market to extend its recovery rally amid growing anxiety over the economy and deteriorating sector leadership. Doesn't mean we're looking at a return to the September lows, but market action does suggest that we could be in for further backing and filling until Friday's data at the earliest, and the Fed meeting next week at the latest.
In fact, next week's Fed meeting could be the next catalyst for buyers, as market also telling us today that it expects Greenspan & Co. to lower rates. Fed fund futures now show a near certainty of a 25 basis point rate cut next week, and a 50/50 shot at a 50 basis point move. Should note that fund futures tend to be very accurate in predicting Fed action, when action being taken at regularly scheduled meetings. Though there might be some concern that Fed is merely pushing on a string, Briefing.com expects a rate cut to bolster market psychology over the short-term.
Financial and home construction stocks should respond positively to any cut in rates. Interestingly, the latter group is up in today's action while the former is down fractionally. -- Robert Walberg, Briefing.com
2:36PM IBM (IBM) 74.97 -1.59: Soundview Technology is highly comforted following yesterday's IBM Technology Group analyst meeting; now expects microelectronics business to be profitable in Q402; forecasts several more quarters of margin improvement from working down inventory of discontinued aluminum CMOS product. Firm is also encouraged by 300 mm fab, expected to reduce costs by 30-40% per chip, appearing to be on or ahead of plan, boding well for profits beyond Q4; maintains Outperform rating. Despite positive feedback, shares have declined in today's session, currently at 2.1% in the red.
1:55PM Microtune (TUNE) 1.66 -0.08: Although in line with its pre-announcement on 10/2, Q302 earnings came in $0.02 short of consensus estimate of loss of $0.12; company also guided down Q4 revenues to 20-30% decline - well below expectation of $26.9 mln. Wachovia Sec downgrades to HOLD from Buy due to continuously deteriorating end market conditions with no profitability in sight, but is encouraged by company's plans to resize and make profitability one of top priorities. Goldman Sachs maintains Mkt Outperform rating; although sees few near-term catalysts to drive stock higher, does not expect significant downside risk from current levels. Shares are down 4.6% on disappointing earnings, guidance, and downgrade.
1:04PM Dell Computer: Rollins clarifies Michael Dell's "uptick" comment (DELL) 28.25 -0.72: We are hearing that DELL President Kevin Rollins said at the Prudential tech conference that Michael Dell's earlier comment that their biz was seeing an uptick was taken out of context; we're told that Rollins clarified by saying that "things remain stable at a low base".
11:30AM Microsoft at range floor (MSFT) 51.05 -0.90: -- Technical -- Continues to hold near the bottom of its better than week long trading range in the 50.90 area. Short term takes a sustained push back through resistances at 51.2 and the 51.5 area to help improve the posture. Failure exposes next supports at 50.05 (top of Oct 15 gap) and 49.50 (38% retrace of Sep/Oct rally).
9:50AM Qualcomm: Fechtor Detweiler questions significance of TD-SCDMA (QCOM) 33.52 -1.88: -- Update -- Hearing that research firm Fechtor Detweiler is questioning the significance of the TD-SCDMA reports noted by AmTech Research (see 8:40 comment); Fechtor says that TD-SCDMA is only supported by Siemens, that the Chinese government has supported it for some time and it is well known, and that it would be a minimum of 3-5 years to implement; firm sees no short-term impact on QCOM, and even questions whether there are any long-term implications.
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