DAILY WRAP-UP
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Markets focused on the contents of the economic program presented by U.S.
President George Bush today, and trading was muted before and after the
details were available to investors and traders. The Nasdaq outperformed
the Dow for much of the session. Shortly after President Bush concluded his
speech, the blue chip average briefly traded in positive territory.
However, it could not hold onto its gains, and finished in the red.
The Dow Jones Industrial Average retreated 32.98 points or 0.38% to
8,740.59, while the Nasdaq composite rallied 10.25 points or 0.72% to
finish at 1,431.57. The S&P 500 settled with a decline of 6.08 points or
0.65% to 922.93. Volume on the NYSE totaled 1.532 billion shares. At the
Nasdaq, some 1.75 billion shares exchanged hands.
Much of the news in the stimulus package appeared to be priced into the
stock market already, according to Alan Ackerman, executive vice president
& market strategist at Fahnestock &Co.
However, the strategist was cheered by the stock gains immediately
following Mr. Bush's speech. "The fact that the market did not react
downward, which it has so often after Bush's speeches, was somewhat of a
favorable sign. The market acts as if it wants to go up, but essentially
the package is a very big package. It's going to take some time to work its
way into the system, and it's not likely to be a quick fix for either the
economy or the market."
The economic stimulus package unveiled by President Bush at the Economic
Club of Chicago is expected to cost $674 billion over 10 years, and
includes numerous key components. The plan contains the well-known
provision to eliminate tax on dividends. As well, it proposes extensions
for unemployment insurance, increased incentives for small business, and an
accelerated tax rate cut for all income levels.
Stocks that pay out a dividend were mixed Tuesday. FleetBoston Financial
(NYSE: FBF) fell 1.02% to $27.18, while R.J. Reynolds (NYSE: RJR) ascended
3.44% to $42.67.
Storage stocks boosted fortunes in the tech sector after a positive outlook
issued by EMC (NYSE: EMC). The company said its Q4 sales and profits would
top prior expectations. Merrill Lynch (NYSE: MER) more than doubled its
estimation of EMC's 2003 earnings to $0.12 per share. EMC finished the
session with a gain of 9.85% to $7.47. IBM (NYSE: IBM) shares advanced
2.88% to $86.00.
Oracle (NASDAQ: ORCL) said it would revisit its policy on dividend
payments. The business software giant jumped 6.1% to $12.69.
Other technology bellwethers traded to the upside. Sanmina (NASDAQ: SANM)
rocketed 10.26% to $5.05 after announcing a $3.6 billion pact to
manufacture some workstations and servers for IBM. Microsoft (NASDAQ:
MSFT), which said it had no intention of instituting a dividend, gained
1.33% to $55.50.
However, retail continued to be a drag on the markets. Upscale jeweler
Tiffany (NYSE: TIF) and electronics retailer Circuit City (NYSE: CC)
lowered guidance for their fourth quarter financial results, citing
disappointing holiday sales. Tiffany dulled 1.84% to $25.05, while Circuit
City finished 3.42% higher to $7.55.
Regeneron Pharmaceuticals (NASDAQ: REGN) said it had received fast track
status for its Axokine therapy for severe obesity. The drug researcher
gained 3.85% to $19.42.
Oil stocks fell in advance of a meeting of the Organization of Petroleum
Exporting Countries. It's expected that the cartel will vote to boost
output levels by about two million barrels per day. ChevronTexaco (NYSE:
CVX) shed 2.07% to $68.45.
"I think OPEC's planned meeting for Sunday has the makings of a positive
surprise for the U.S. economy and world economies," said Fahnestock's Ackerman.
In small cap trading, the Russell 2000 slipped 3.05 points or 0.77% to
393.95, while the S&P600 index gave back 2.15 points or 1.06% to 201.02.
Some of the small cap stocks making big moves included Dynegy (NYSE: DYN).
The energy merchant surged 45.07% to $2.06 on volume of 44,757,400 after it
announced an upbeat earnings outlook for 2003. The company predicted
profits in the range of $31 million to $54 million or between $0.08 and
$0.15 per share. The consensus estimate had been for an EPS figure of
$0.03. The forecast from Dynegy assumes it can exit its communications
businesses, and that it can extend $1.3 billion in bank agreements due in
April and May.
Gymboree (NASDAQ: GYMB) tumbled 12.45% to $13.92 on volume of 5,363,399.
The children's apparel maker guided the market to expect lower earnings for
its fourth quarter as a result of weaker than anticipated same-store-sales.
The Burlingame, California company now expects to notch earnings in the
range $0.33 to $0.36 per share, down from previous expectations of $0.38 to
$0.40 a share.
In commodities trading on the New York Mercantile Exchange, February crude
oil futures reversed $1.02 to $31.08, while February natural gas traded
ahead $0.19 to $5.127. February gold futures stumbled $4.40 to $347.70.
In Canadian markets stocks traded below the breakeven line throughout the
session, as investors took profits after days of gains on Bay Street. Sharp
gains in the technology group pared losses on the broader market. Gold
stocks were the biggest losers on the day.
The TSX composite slipped 34.49 points or 0.5% to 6,802.78, and the small
cap Venture index lost 6.78 points or 0.62% to 1,095.37.
Sharp gains among the technology issues prevented further losses. Telecom
equipment maker Nortel Networks (TSX: T.NT) sprinted 3.49% to $3.26 on
positive commentary from the analyst community. Sanford Bernstein said that
potential regulatory changes in the wholesale access pricing policy for
telecommunications networks could benefit Nortel and Lucent (NYSE: LU).
Their customers could spend more if access to networks becomes more
competitive. Salomon Smith Barney said Nortel could report a 1% increase in
its fourth quarter revenue resulting from a traditional fourth quarter
spending increase by its customers. At the same time, most other analysts
expect Nortel will report a revenue decline of 3%.
The business software maker Cognos (TSX: T.CSN) jumped 5.62% to $39.45
after U.S. Bancorp Piper Jaffray initiated coverage with an "outperform"
rating and a US$28 target. After naming former Terra Lycos executive
Timothy J. Wright as its new chief information and technology officer, Geac
(TSX: T.GAC) gained 2.31% to $4.42.
Synsorb Biotech (TSX: T.SYB) skyrocketed 169.44% to $2.29 after announcing
a plan to convert the drug research company into an oil and gas exploration
firm. Pending shareholder approval, Synsorb would issue about $3.5 million
in secured debentures and 5.5 million common shares. A group of investors
led by former PanCanadian Energy chief David Tuer is expected to end up
with about 45% of the new company's equity.
Interest in gold miners ebbed as equities and the U.S. dollar gained
strength. Meridian Gold (TSX: T.MNG) retreated 4.58% to $26.05, and Bema
Gold (TSX: T.BGO) slipped 4.63% to $2.06.
The energy group fell 1.8% on word Saudi Arabia would propose adding up to
two million barrels a day to existing production. Compton Petroleum (TSX:
T.CMT) slid 2.16% to $4.99 and EnCana (TSX: T.ECA) gave back 3.08% to $47.88.
Discount carrier WestJet (TSX: T.WJA) announced that it would apply a
temporary surcharge to cover the rising cost of aviation fuel. Shares of
the Calgary-based airline gave back 1.06% to $15.82. Air Canada (TSX: T.AC)
shares were also lower as the major Canadian carrier fell 4% to close at
$4.79.
In corporate news, Bruce Power, the Ontario nuclear energy plant, said that
the plant had had a positive environmental assessment as a first step in
bringing at least one of its reactors back online. Federal Regulators said
in December that a tangle over ownership would have to be settled before
the plant would be permitted to refuel. Majority owner British Energy said
in late December that it would sell its 82% interest in the facility to a
consortium led by uranium producer Cameco Corp (TSX: T.CCO) for up to $770
million. Shares of Cameco traded down 1.72% to $39.46.
In the industrial group, Vancouver-based MacDonald Dettwiler (TSX: T.MDA)
announced after the market closed Monday that it had secured a $200 million
contract to deliver a new imaging and surveillance radar system for the
Department of National Defense. MDA shares surged 8.46% to $23.85. Flight
simulator maker CAE Inc (TSX: T.CAE) also announced a defense contract win
on Monday. CAE will supply an Aurora flight deck simulator for Canadian
Forces worth about $28 million. CAE shares climbed 3.34% to $5.88.
The Canadian dollar was worth US$0.6398. |
