Updated: 10-Feb-03
General Commentary
War, what is it good for? Certainly, not the financial markets. Investors simply have little reason to buy stocks as long as threat of war continues to hang over the market. Administration may have turned to a different spokesperson this weekend, but Secretary of Defense Rumsfeld sounded the same message -- US will act alone if need be to stop Iraq, and the time for such action is fast approaching. In other words, investors are likely to be paralyzed by Iraqi crisis again this week.
Unfortunately, there's not much other news to distract the market. Earnings season in tech is largely over. There is one notable exception and that is Dell Computer (DELL). Box-builder set to report results on Thursday. However, does anybody really think a PC company is going to provide the kind of upbeat guidance needed to rally the overall sector. Didn't think so.
There are a handful of second and third tier tech companies also slated to release their earnings numbers (see Tech Earnings Calendar page) this week, but none with the power to influence the entire sector/market. Barring a bullish shock from DELL, earnings season for tech will come to an end with no help for the sector.
In a nutshell, majority of companies beat street estimates only to offer cautious outlooks for the first half of 2003. That was not the message investors, long starved for an earnings turnaround, wanted to hear - especially not after bidding many stocks in the sector up as much as 30%, 40% and even 50% into earnings season.
Given the ongoing threat of war and the fact that Dell's numbers will not alter the investor mindset regarding the earnings outlook, there's little reason to be enthusiastic about the tech sector at the moment.
Briefing.com not even cheered by the deeply oversold technical condition. Yes, it suggests that we could see a bounce at any time but more and more companies and industry indices are breaking down badly. Consequently, even if we get a bounce, it now looks like it will be limited in scope -- with fresh losses to follow.
Wireless and Internet Service stocks continue to exhibit decent relative strength during the pullback. Valuations in these groups are high but resilience is worth noting. Meanwhile, Chip and Hardware stocks continue to be the biggest drags on the sector.
Robert Walberg |
