For Tuesday, September 02, 2003
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Market Recap
Investors were determined to start off the normally gray month of September
on the right foot. Looking at the average monthly returns of the S&P 500
Index over the past 33 years, September is the only month to post a
negative return! (For more information on the historical returns of
September, check out The Seasonality of September.) Despite this daunting
history, the major market indices trekked steadily higher following the
release of some encouraging economic data. To start things off, the
Institute of Supply Management (ISM) index reading for the manufacturing
sector came in at 54.7 percent for August. This reading easily surpassed
July’s report of 51.8 percent and analysts’ outlook of 53.5 percent. ISM
readings above the 50 mark indicate expansion within the sector.
Another bit of positive news comes from Challenger, Gray, & Christmas. The
company announced that the pace of job cuts fell six percent in August from
July’s level. It is also the fourth straight month of announced job cuts
falling below the 100,000 mark. Looking ahead to tomorrow, investors will
receive a look at July construction spending and the Federal Reserve Beige
Book.
Tech stocks led the charge higher today after several analysts stepped up
and raised their ratings. Both Dell and the enterprise hardware sector were
upgraded this morning due to improving end-market conditions. Another
brokerage firm upgraded the software sector from “neutral” to “attractive”
on expectations for a seasonally strong fourth quarter and improving market
conditions. PeopleSoft was upgraded from “hold” to “buy” ahead of its
analyst meeting on Thursday. Furthermore, the Semiconductor Industry
Association reported that worldwide semiconductor sales rose 10.5 percent
in July from the same period a year ago.
The tech-laden Nasdaq Composite tacked on more than 1.71 percent this
afternoon and is now at its highest level since April 2002. In addition,
its rally higher has pulled its 10-month and 20-month moving averages into
a bullish cross, which often indicates further long-term strength.
On a down note, International Paper was downgraded from “hold” to “sell.”
The brokerage firm cited weaker paper markets, rising dollar, and valuation
issues for the rating cut. However, the stock managed to shrug off the bad
news and close higher on the day. The oil service sector has also retreated
following downgrades of Baker Hughes and Schlumberger from “buy” to “hold.”
The Dow Jones Industrials gained more than 1.1 percent, moving above the
9500 level for the first time since June 2002. Only 3M finished the day in
the red while SBC Communications settled at the break-even level.
Levels to watch for in Wednesday’s trading:
Dow Jones Industrial Average (INDU) – support at 9255; resistance at 9800
S&P 500 Index (SPX) – support at 995; resistance at 1050
Nasdaq Composite (COMP) – support at 1750; resistance at 2000
For a more in-depth market recap analysis, go to:
schaeffersresearch.com
Checking in on Chips
The semiconductor sector has been a strong performer for some time now,
soaring 54 percent year-to-date. Other notable news items from within the
sector came from bellwether Intel (INTC: sentiment, chart, options) ...
Read MORE of this commentary at:
schaeffersresearch.com |
