For the record from Briefing.com
<<General Commentary
Stocks opened higher on Wednesday, fueled by a thin ray of hope that an outstanding Q3 performance by Intel (INTC 31.76 +0.68) would translate into across-the-board growth and margins expansion sufficient to support equity market valuations. By the end of the day, hope had faded into wariness and the markets had given up the gains and slipped into negative territory. The Dow closed at 9803.05, down 9.93, the S&P was off 2.72 at 1046.76, and the Nasdaq slipped 4.09 to 1939.10. With the exception of Intel and semiconductor capital equipment stocks, tech shares generally ended lower.
We see in this lull the peaking of a tide that has floated all shares. The early optimism over favorable fiscal and monetary policies, that fueled the past year's rally and took the Nasdaq up 45.2% year-to-date, is essentially spent. With every rising tide, there is an inevitable backwash. Even though, broadly speaking, equities are modestly undervalued based on the Fed model, in order to move forward, there needs to be convincing evidence of growth and margins expansion necessary to sustain valuations, particularly for tech shares. Intel delivered on the growth and margins. Industry conditions are such that Novellus Systems (NVLS 38.54 +1.12) offers a real promise of growth and margins expansion. Despite our cautious optimism, International Business Machines (IBM 92.74 +0.02) has yet to fully deliver. Assess valuations against company fundamentals, and adjust your portfolio accordingly.--Ping Yu, Briefing.com>> |
