Market Recap
Stocks bled again today, as selling pressure continues to overwhelm waning
buying strength. Investors scrutinized another pile of lackluster mid-
quarter updates and rating changes. Topping today’s list of movers, General
Motors reaffirmed its 2003 financial targets and Xilinx stuck to its
current second-quarter revenue target. In addition, Texas Instruments said
that its third-quarter sales and earnings would come in at the top of its
previous estimate due to strong demand. The chip company now expects
earnings of 20-22 cents per share compared to previous estimates of 19-23
cents per share. These announcements failed to cheer investors, leaving the
shares deep in negative territory.
Another chip manufacturer in the red this afternoon was Micron Technology.
The firm was downgraded from “outperform” to “neutral” on the risk that
contract and spot prices for memory chips could decline in the next four to
eight weeks. The PHLX Semiconductor Index retreated more than five percent
today and is fast approaching potential support at its rising 20-day moving
average. The Nasdaq Composite was also weighed down by weakness in tech
stocks. The index surrendered 2.64 percent to close below its 10-day
trendline (at 1840) for the first time since August 11.
In other news, 3Com stated that it would cut 1,000 jobs because of its
plans to outsource its enterprise networking product operations. Southwest
Airlines was upgraded from “equal weight” to “overweight.” The brokerage
house cited that after six months of underperforming their peers, the
shares should now outperform over the next 12 months. XOMA Ltd. and
Genentech received positive news recently. The FDA panel voted to recommend
approval of their co-developed psoriasis drug Raptiva.
The Dow Jones Industrials shed 0.91 percent in trading today, falling below
previous support at the 9500 level. In fact, the Dow suffered its first
close below its 10-day and 20-day moving averages (at 9480 and 9420,
respectively) since August 7. On a positive note, Boeing received an
aircraft order valued at $410 million from Shanghai Airlines. Of its 30
components, only Johnson & Johnson, Coca-Cola, Altria Group, Merck, and SBC
Communications closed the day higher. Filling out the list of losers are
Honeywell International, IBM, Intel, International Paper, and J.P. Morgan
Chase.
Economic news starts to pick up again tomorrow with the release of August
import prices and July international trade. However, the key reports of the
week won’t show up until Friday with the release of the August producer
price index and August retail sales.
Levels to watch for in Thursday’s trading:
Dow Jones Industrial Average (INDU) – support at 9255; resistance at 9800
S&P 500 (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 |
