From Briefing.com: 4:20 pm : When looking at the losses in the equity market on Wednesday, keep these numbers in mind: +7.2%, +6.4%, +4.8% and +4.7%. Those were the percentage returns entering Wednesday's trading since the close on September 17th for the Russell 2000, Nasdaq, Dow, and S&P 500, respectively.
There is little mistaking the fact that the FOMC's rate cut on September 18th provided a bullish catalyst for the market. What happened today, then, was nothing more than a move to take profits from an overextended market.
Morgan Stanley initiating coverage of Intel (INTC 25.81, -0.57), Adv. Micro Devices (AMD 13.23, +0.03) and Nvidia (NVDA 35.82, -1.59) with Underweight ratings acted as a restraining factor today, as that call pressured the semiconductor group. The Philadelphia Semiconductor Index ("SOX") declined 2.1%.
A particularly weak showing from Micron (MU 10.74, -1.05), which reported its third straight quarterly loss, was an added factor behind the semiconductor group's weakness and the tech sector's (-1.0%) underperformance.
The materials sector (-1.3%) was the worst-performing sector. Its weakness is apt to generate some chatter about it being a sign the market is worried about a recession. Don't pay attention to that.
Like the broader market, the materials sector ran into profit taking after a remarkable run that saw the sector surge 8.1% from its close on September 17th. That move was aided by a weakening dollar, but the third consecutive gain in the dollar index (+0.3%) today helped spark the profit-taking activity.
Overall, there wasn't anything in today's trading action to suggest there are pressing concerns about the economy slipping into a recession. To wit, Treasuries were weak across the yield curve, retailers were among the best-performing stocks, and the financial sector (+0.01%) eked out a modest gain thanks to gains in the banking stocks.
The consumer discretionary sector (+0.3%) was the standout in the broader market. All other sectors, with the exception of financials and health care (+0.1%), ended the day lower.
A pair of economic releases helped assuage recession concerns for the time being. Prior to the open, ADP reported 58K new non-government jobs were created in September; and at 10:00 ET the ISM Services Index for September showed a reading of 54.8. While the latter was down from 55.8 in the prior month, it still painted a picture of growth as a number above 50 reflects expansion.
For the most part, the market is choosing to hold back on the economic assessment until it can catch a glimpse of the government's employment report on Friday. Economists are forecasting a 100K increase in nonfarm payrolls, which would be a welcome rebound from the 4K decline reported for August.DJ30 -79.26 NASDAQ -17.68 SP500 -7.04 NASDAQ Dec/Adv/Vol 1803/1135/1.88 bln NYSE Dec/Adv/Vol 2049/1223/1.25 bln
4:09PM Cascade Microtech lowers Q3 EPS and revs below consensus (CSCD) 9.95 +0.12 : Co lowers Q3 EPS to ($0.02) - ($0.04) vs $0.08 Reuters consensus, down from $0.01-0.06 prior guidance; co lowers Q3 revs to $21.4-21.6 vs $24.2 mln Reuters consensus, down from $23-25 mln prior guidance. Co says, "The revenue shortfall was caused by lower than expected systems shipments in the Company's Engineering Products Division. Certain expected systems orders have been delayed and shipment dates of certain orders have been pushed out to later quarters. The Company typically books and ships a large portion of its revenue during the quarter. A systems order or shipment delay can significantly affect the revenue and operating results for the quarter due to their larger size. Production Products Division revenue was up sequentially with an increase in probe card shipments but Gryphics product revenue was lower than expected and only up slightly from the second quarter. The earnings shortfall is primarily due to the lower revenue and the related lower gross margin... "Our Engineering Products Division experienced some system order delays and push outs in the third quarter. Our overall systems bookings were lower than expected for the third quarter and our systems book to bill ratio was below one. The slow-down in activity is occurring in all regions and with all types of major customers. We do not appear, however, to be losing orders to the competition and we are not experiencing cancellations."
3:59PM Market View: Another day of choppy consolidation (TECHX) : The defensive mode that took hold in the wake of Monday's aggressive advance remained in place at the start of action today but the indices began to stabilize near the 10 ET ISM Services data. The headline number was slightly weaker than expected but close to consensus (54.8 vs consensus of 55). More importantly the employment component showed a good jump to 52.7 from 47.9. The rebound carried into midday but the indices were unable to clear yesterday's late day highs with further profit taking noted into the afternoon. Pressure today came from Casino -3.9%, Trucking -2.6%, Rail -2.6%, Steel -2.5%, Semi -2.4%, Oil -1.4%, Commodity Index -1.2%, Auto Parts -1.2% and Disk Drive -1.2%. Home Construction provided upside leadership but after three straight days of gains and a run of more than 15% off last week's low it succumbed to profit taking pressures (XHB +1.9%). Modest gains were also noted in Retail +0.9%, Pharma +0.8% and Bank +0.4%. Two days of choppy, negatively biased action has inflicted no technical damage yet with the short term support zone of interest at the highs from late last week. |
