From Briefing.com: General Commentary - For the first time since late August, the Nasdaq closed above 1400. It did so by staging another rally into the close. Tech-heavy index didn't have to run far to end in positive territory, but mere fact that it did so shows that there's still a surprising degree of buying interest in a market/sector that has run very far, very fast.
Gains attributed to speculation that Republican Party just might succeed in capturing both chambers of Congress in yesterday's election. It's still to early to predict the outcome of the election, but early returns point to the status quo (a divided Congress) being maintained.
Indices also underpinned by the near universal belief that the Fed will cut rates by 25 basis points this afternoon. Speculation rising that cut could be as big as 50 basis points.
Problem from a trading standpoint is that the good news from these stories is already in the market. In fact, we would argue the market is overstating the potential impact of its preferred scenarios. This sets us up for a classic "buy the rumor, sell the fact" reaction to the election and the Fed. In particular, if Fed opts to cut the funds rate by only 25 basis points, there will be those on the street arguing that Greenspan & Co. are again behind the curve and that the move wasn't bold enough to get economy back on track.
Ultimately, with the election and Fed decision behind it, market will shift its focus back to the unknown issues: economic growth, timing of earnings recovery and threat of war with Iraq. Quite frankly, Briefing.com not terribly optimistic on any of these counts, which is why we contend that prudence dictates reducing exposure to the sector and the market.
Robert Walberg
6:33PM Tuesday After Hours price changes vs 4pm ET levels: Earnings news has been the focal point for a while now in the after hours session, but tonight, there are a number of other developments getting their fair share of attention-- and we're not talking about the election.
For instance, insurance company, Brown & Brown (BRO 30.44 +1.74), has been thrust into the spotlight with an acknowledgment from Standard & Poor's that it will be adding BRO to the S&P 400 Midcap Index. The date of inclusion is still to be announced, but BRO will be replacing Golden State Bancorp, which is being acquired by Citigroup (C).
In other news, Skyworks (SWKS 6.85 -1.05) is on the defensive after the wireless semiconductor company announced that it intends to issue $160 million aggregate principal amount of its convertible subordinated notes due 2007 in a private placement. The notes will be sold only to qualified institutional buyers and approximately $120 mln of the net proceeds will be used to prepay, in part, amounts outstanding under the company's financing agreement with Conexant Systems (0NXT).
Finally, Computer Sciences (CSC 31.36 -1.99) has slumped in extended action. After reporting an in-line fiscal Q2 (Sep) profit of $0.54 per share, the IT services company cut its FY03 EPS outlook to the low-to-mid $2.60 range. That is below the Multex consensus estimate of $2.68 and, according to Reuters, down from a prior estimate of $2.73-2.88 per share.
5:16PM Entegris backs Q1 guidance (ENTG) 8.21 -0.10: Co sees sales in low $50 million range -- expects Q1 restructuring charge of $1.5 million; will cut 121 jobs.
4:41PM Skyworks announces $160 mln convertible offering (SWKS) 7.90 -0.23: Co announces that it intends to issue $160 million aggregate principal amount of its convertible subordinated notes due 2007 in a private placement.
4:17PM Computer Sciences matches estimates (CSC) 33.35 -0.86: Reports Q2 (Sep) earnings of $0.54 per share, in line with the Multex consensus of $0.54; revenues fell 1.2% year/year to $2.73 bln vs the $2.81 bln consensus; earnings per share for the fiscal year "are now anticipated to be in the low-to-mid $2.60 range" -- Multex consensus estimate is for earnings of $2.68 per share.
10:44AM PMC-Sierra (PMCS) 6.55 +0.15: Shares have advanced 2.3% despite cautious note by Banc of America with downgrade to MKT PERFORM from Buy. Firm views PMCS's 135% run up in recent weeks as unwarranted; although firm does not question company's "survivor" status, thinks near-term risk is too great due to weak end markets, lack of any tangible improvement in business, and potential for downward revisions; believes it is best to step to sidelines at current levels; expects more attractive long-term entry points will be found ahead.
finance.yahoo.com^SOXX+ALTR+AMAT+AMD+BRCM+CSC+ENTG+INTC+KLAC+LLTC+LSCC+LSI+MOT+MU+MXIM+NSM+NVLS+PMCS+SWKS+TER+TXN+XLNX+^VIX+^IXIC+^SPX&d=t
Briefing.com just refuses to admit we have started a new bull market. What are these guys drinking?
RtS |
