MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY JUNE 30, 1998 (1)
MARKET OVERVIEW
Both Bay Street and Wall Street gave ground in late trading yesterday. A sudden afternoon slump pushed the Toronto and New York stock markets into negative territory Tuesday as some big-name stocks suffered heavy losses.
Major markets were unsettled after the White House confirmed that a U.S. F-16 fighter aircraft had fired a missile at an Iraqi radar site after the Iraqis began tracking a formation of coalition forces aircraft.
Asia's bedraggled markets chalked up some rare gains yesterday as government moves to clean up Japan's bad loan mess helped galvanize sentiment in Tokyo. However, in Europe stocks closed mixed, depressed by Wall Street's weak performance and fears that the US$ would slide.
CANADA
Toronto Stocks Lose Altitude As Investors Tread Warily Ahead Of Holidays
Canadian stocks fell, led by BCE Inc. and the country's largest banks, as investors expressed caution that share prices now may fully reflect future earnings. "At some point, market forces prevail and investors say the short-term potential for earnings in stocks like banks is more than fully reflected in the rally," said Craig Strachan, manager of research at TD Evergreen, a division of TD Securities Inc.
Toronto's equities rally ran out of steam by the close of trading on Tuesday as investors finished their quarter end portfolio shuffling ahead of Wednesday's Canadian public holiday. Canada's largest stock market has rumbled higher since the close of dealings on June 22, with the index adding an impressive 229 points from last Monday's finish of 7137.52 points.
After opening flat the Toronto Stock Exchange's 300 Composite Index fell 42.49 points or 0.6% to 7366.89 points. Decliners outpaced advancers 476 to 464, with 301 issues unchanged. About 109.4 million shares changed hands, up from about 76.8 million shares traded Monday.
"The market got a little tired," said Fred Ketchen, ScotiaMcLeod's director of equity trading. "Time to give this market a little bit of a rest."
"It was a bit of a late-day thing," said Mark Mullins, chief economist at Midland Walwyn in Toronto. "Things just started to slide a bit (at midday), they tried to come back around 2:30, then slid right off the end." Mullins said this could have stemmed from profit-taking before the Canada Day holiday. "This is a very strange week," he said. "There's the holiday, then the bond market shuts early on Thursday because of the U.S. holiday on Friday."
"Everybody's surprised the market ended down," said Jim Doak, president of Enterprise Capital Management. "The typical quarter end window dressing didn't carry it higher." Mutual fund managers traditionally dump poorly performing issues in favor of winners at the close of each three-month period, which generally boosts the index. Doak warned that North American manufacturers were leery of weakened Asian currencies, which would make importing Asian-made cars and goods more attractive.
Banks, such as Royal Bank of Canada, and utilities fell as investors sold issues that have outperformed the market in the first half of the year. The two groups were the best performing indexes on TSE 300 in the first half of 1998.
All but three of Toronto's 14 subindexes shed ground, led by utilities, media, influential financial services, merchandising, transportation, conglomerates and oil & gas.
BCE Inc. - Canada's most widely held stock - pulled the utilities sector down by 1.30 per cent. BCE shares dropped $1.10 to $62.35 on 1.4 million shares traded.
The financial services index lost 1.04 per cent as the bigger banks were down amid heavy trading. CIBC dropped $1.40 to $47.30, Scotiabank dipped $1.10 to $36.40 and Royal Bank gave up 80 cents to $88.50. Each saw more than one million shares traded Tuesday. Toronto Dominion Bank also slid $1.20 to $66.50. In a recent survey by Compas Inc., three out of four Canadians polled said they would accept proposed mergers that would join four of the country's biggest banks into two larger firms. The survey found many of those polled said their acceptance is conditional on the government encouraging new competition.
The TSE Oil & Gas Composite Index lost ground, losing 0.5% or 29.53 to 6069.63. Among the sub-components, the Integrated Oil's fell 0.6% or 49.92 to 8429.26. The Oil & Gas Producers lost 0.3% or 17.08 to 5379.25. The Oil & Gas Services gave up the most ground, losing 1.5% or 36.29 to 2405.86.
Among the top 50 most active traded issues on the TSE was Northstar Energy Corp., whose stock rose 0.60 to 11.20 in trade of 16.3 million shares, topping most actives. Oklahoma based Devon Energy Corp. said it plans to buy Calgary-based Northstar for 15.4 million of its shares and the assumption of its debtload in a deal valued at C$830 million. Other most active issues included Pinnacle Resources, Renaissance Energy, Westfort Energy, Newport Petroleum and Gulf Canada Resources. Service issues were not represented among the most active's.
Paramount Resources gained $1.40 to $14.00 and Seven Seas Petroleum (u) gained $1.15 to $20.25. Among service issues, Badger Daylighting gained $1.10 to $11.25, Dreco Energy services $1.00 to $39.00, Akita Drilling $0.75 to $10.50 and IPSCO $$0.75 to $40.00.
On the downside, Chieftain International fell $0.85 to $34.40, Northrock Resources $0.75 to $15.30 and canadian Occidental Petroleum $0.70 to $31.40. Among service issues, Veritas Energy fell $2.30 to $72.00, Precision Drilling $0.75 to $28.95 and Tesco $0.65 to $15.90.
On the plus side of the TSE 300, Golds, real estate and pipelines were the index gainers.
Toronto's gold and precious minerals group was the top performer Tuesday, adding 1.99 per cent as the spot price for bullion jumped 1% or $3.20 US to $297.00 US in New York. The US$ fell against the Japanese yen, making it cheaper for consumers in the world's seventh largest gold consuming nation to buy the metal. Further gains in bullion are expected as Japan makes progress in mending its frayed banking system. Barrick Gold Corp. (ABX/TSE) rose 80› to $28, Euro-Nevada Mining Corp. (EN/TSE) edged up 10› to $20.05 and Placer Dome Inc. (PDG/TSE) gained 65› to $17.10.
Real estate was up 1.23 per cent as Cadillac Fairview - newly added to the TSE 300 - gained $2.15 to $33.80. Pipelines eeked out a very small gain.
Other Canadian markets fell. The Montreal Exchange portfolio lost 36 points, or 1%, to 3730.31. The Vancouver Stock Exchange fell 0.04 of a point to 532.2. The Alberta Stock Exchange combined value index fell 0.56 to 2089.89. Declining issues once again outnumbered advancing issues 161 to 150 with another 111 issues unchanged.
Oil related issues among the top 25 most active traded issues on the ASE included Anvil Resources, HEGCO Canada, Alta Pacific Capital, ICE Drilling, Dalton Resources and Syner-Seis Tech.
Total Energy Services gained $0.20 to $2.10, Mera Petroleum $0.13 to $0.70 and Niko Resources $0.10 to $4.35.
On the flipside, Arrival Energy A fell $0.20 to $1.00, Draig Energy $0.15 to $1.50, Fairline Energy $0.15 to $0.30, Red Sea Oil $0.15 to $1.65, Syner-Seis Tech $0.15 to $0.50, Request Seismic $0.12 to $1.73, Scarlet Exploration $0.12 to $0.70, Lexxor Energy $0.11 to $0.35, Belfast Petroleum $0.10 to $2.30, Kintail Energy $0.10 to $0.70, Resolution Energy $0.10 to $0.10, Sterling Resources $0.10 to $0.65 and Stellarton Energy $0.10 to $2.45.
All trading on Canadian stock exchanges is shut down on Wednesday for the national Canada Day holiday but will restart on Thursday and Friday.
The Canadian dollar was slightly firmer at C$1.4679 (US$0.6810) in late afternoon trading on Tuesday ahead of the Canada Day holiday on Wednesday.
Canadian markets will be closed on Wednesday and will reopen on Thursday.
Analysts said the release of Canadian economic data early on Tuesday failed to have much of an impact on the Canadian currency.
Statistics Canada reported that Canada's gross domestic product for April was unchanged after a 0.4 percent rise the previous month.
A Reuters survey of economists forecast Canada's monthly GDP would rise 0.3 percent in April.
"We had a bunch of numbers today that weren't really negative for the currency," said David Ebata, senior Canadian analyst with Technical Data.
Analysts also said markets were carefully watching the U.S. Federal Reserve's Federal Open Market Committee meeting on Tuesday and Wednesday for signs of a change in U.S. monetary policy.
A U.S. interest rate hike, however, is considered unlikely
"The Canada dollar is deadpanned right now and the FOMC is the big focus," said Mario Angastiniotis, economist with MMS International.
On the crosses, the Canada unit traded flat at 1.2306 marks and fell to 94.67 yen from 96.39 yen at Monday's close.
NEW YORK
Tuesday's Markets
Befitting its tumultuous nature, the second quarter came to an end Tuesday with blue chip stocks backpedaling.
However, the Nasdaq managed to rise 3.6, while the majority of stocks were winners and trading volumes were high. The Dow slid 45 and the S&P 500 ended its string of record setting closes with a decline of 4.65.
A big decline in shares of Walt Disney Co. (DIS) and weakness in the drug and financial sectors weighed on the Dow and S&P 500 Tuesday. Renewed gains for Internet stocks help the tech sector resist the malaise infecting other sectors. Oil stocks struggled to rally in reaction to the developments in Iraq, where a U.S. fighter fired on an Iraqi radar installation.
The Dow Jones Industrial Average ($INDUA) rose to as high as 9,020.27 in an initial spurt. By 10 a.m. EDT, however, the blue-chip index was in negative territory and it continued southward until about 11:45 a.m., when it bottomed out just below 8,930. The index climbed back toward neutrality in the first half of the afternoon session, but closed down 45.34 at 8,952.02.
The Nasdaq Composite Index (COMP) diverged from the Dow, falling initially and sliding as low as 1,878.87. It hit positive territory by 2 p.m. EDT and rose as high as 1,897.94 before succumbing to pressure in the broader markets. The index closed up 3.66 to 1,894.74.
The S&P 500 (SPX) slid 4.65 to 1,133.84, while the Russell 2000 Index ($IUX) closed up 3.58 to 457.41.
In New York Stock Exchange trading, 758 million shares changed hands while the breadth of the market favored gainers by a 17-to-13 spread. In Nasdaq activity, 866 million shares were exchanged while advancing issues bested declining stocks by an 11-to-10 spread.
Bond prices rose nearly 1/4 point, sending the yield on the benchmark 30-year Treasury bond down to 5.62%.
Technology Stocks
Following recent record-setting gains, the Morgan Stanley High Tech Index (MSH) slid 3.95 to 595.80 while the Nasdaq 100 Index (NDX) shed 2 to 1,337.
The biggest drag on the indices was Intel Corp. (INTC), which fell 1 11/16 to 74 1/4. The chip giant, along with many of its counterparts, fell victim to ongoing concern about demand and pricing for computer chips.
Following Intel's lead, Xilinx (XLNX) fell 1 13/16 to 34 and Micron Technology Inc. (MU) fell 13/16 to 24 13/16. The Philadelphia Semiconductor Index (SOX) shed 4.20 to 245.93.
General Semiconductor (SEM) fell 9/16 to 9 15/16 after the chip maker said second quarter earnings are expected to be as much as 25% lower than in the first quarter.
Cirrus Logic (CRUS) bucked the trend, rising 1 17/32 to 11 1/8 on word it will unveil a semiconductor that can control a computer's disk drive by itself. Currently, as many as five chips are needed to run such a device.
Also keeping tech measures off balance were Hewlett-Packard (HWP), down 2 1/8 to 59 5/8, Sun Microsystems (SUNW), which slid 13/16 to 43 7/16, Compaq Computer (CPQ), down 13/16 to 28 1/2 and Dell Computer (DELL), off 1 5/16 to 92 13/16.
Conversely, Lucent Technologies (LU) closed up 7/8 to 83 3/16 and Dow member IBM (IBM) gained 11/16 to 114 13/16.
Microsoft (MSFT) fell to as low as 104 5/8 on concern the software firm may delay the delivery of Windows NT 5.0 until the second half of 1999. But the stock closed up 15/16 to 108 3/8. (Investor is owned by Microsoft.)
Continuing their recent gains, Internet stocks also helped push tech proxies higher. The AMEX Inter@active Week Internet Index (IIX) gained 2.19 to 383.20.
Leading the way again was Excite (XCIT), which rose 7 5/8 to 93 1/2 amid ongoing excitement about its 2-for-1 stock split, announced yesterday.
America Online (AOL) rose 2 3/4 to 106 on news three brokerages will pay a total of $37.5 million a year for two years to be listed in the company's personal finance section.
Sportsline USA (SPLN) rose 5 1/16 to 36 9/16 thanks to a reiterated "buy" rating from Salomon Smith Barney.
Elsewhere in the Internet sphere, Yahoo! (YHOO) rose 3 1/16 to 157 1/2, Lycos (LCOS) gained 1 to 75 3/8, CMG Information Services (CMGI) jumped 3 15/16 to 70 3/4, and MindSpring Enterprises (MSPG) was higher by 7 1/4 to 102 7/8.
CyberCash (CYCH) sat out the rally, tumbling 2 1/16 to 12 3/16 after the Internet software company said second-quarter revenues will not meet expectations.
Parametric Technology (PMTC) fell 15/16 to 27 1/8 amid concern that Japan's economic turmoil and a shift to a new product will crimp sales.
Separate profit warnings sent shares of MetaCreations Corp. (MCRE)down 1 5/16 to 4 5/8, while HMT Technology Corp. (HMTT) fell 9/16 to 8 3/8.
The IPO of Mips Technologies (MIPS) failed to generate much momentum, falling 9/16 from the offering price of $14 per share.
Qwest Communications International (QWST) rose 1 1/4 to 34 7/8 on news it has been chosen to provide multimedia and voice services to Cox Enterprises.
Brightpoint Inc. (CELL) rose 1 11/16 to 14 1/2, enjoying a second day of gains on news it has extended an existing agreement with a unit of Omnipoint (OMPT), which rose fractionally.
Active Issues
Walt Disney (DIS) was the biggest drag on the Dow, falling 8 1/16 to 105 1/8 thanks to an earnings estimate downgrade at Salomon Smith Barney.
Johnson & Johnson (JNJ) tumbled 3 1/8 to 73 3/4. The U.S. Food and Drug Administration said its heartburn drug, Propulsid, may cause heart problems in certain patients.
General Motors (GM) fell 1 3/8 to 66 7/8 after Merrill Lynch cut second quarter and 1998 earnings estimates because of strikes that have crippled GM's North American production.
Despite the strong consumer confidence figures, other names weighing on the Dow included consumer giant Procter & Gamble (PG), off 1 3/16 to 91 1/16. Retailer Sears Roebuck (S) was off 1 5/8 to 61 1/16 and Wal-Mart (WMT) dipped 1 5/16 to 60 3/4.
Following the lead of the Dow's retailing components, Dollar General (DG) fell 3 1/4 to 39 9/16 on concern about the retailers' earnings. Meanwhile, U.S. Office Products (OFISD) fell 2 3/4 to 19 1/2 after the office-supplies company posted fiscal fourth-quarter earnings of 46 cents per share, down from 84 cents a year ago.
The military tension in the Persian Gulf helped firm up crude prices, lifting Dow member Chevron (CHV) by 9/16 to 83 1/16. However, the AMEX Oil Index (XOI) and Philadelphia Oil Service Index (OSX) closed off fractionally.
Devon Energy (DVN) fell 1 3/4 to 34 15/16 as the U.S. petroleum company agreed to buy Canadian based Northstar Energy for about $874 million.
American Express (AXP) was the big positive influence on the Dow, rising 2 9/16 to 114. Other financial stocks were in retreat, however, as the Philadelphia KBW Banking Index (BKX) slid 9.32 to 853.54.
Star Banc Corp. (STB), off 1/2 to 63 7/8, and Firstar Corp. (FSR), which rose 4 5/16 to 38, are close to announcing a merger deal valued at $5 billion or more, The Wall Street Journal reported.
Hambrecht & Quist Group (HQ) rose 6 7/16 to 36 5/16 on speculation CS First Boston will make an offer to acquire the investment bank.
Nationwide Financial Services (NFS) climbed 4 to 51 after the insurer was rated "buy'' by Bear Stearns.
Drug stocks followed Johnson & Johnson lower, with the AMEX Pharmaceutical Index (DRG) sliding 9.38 to 671.22. Glaxo Wellcome (GLX) closed down 1 11/16 to 59 13/16 and Bristol-Myers Squibb (BMY) dipped 3 to 114 15/16.
Pfizer Inc. (PFE) fell for a second day amid ongoing concern about FDA reports of men suffering serious adverse reactions or dying after taking Viagra. It was down 1 1/4 to 108 11/16.
FDA action also moved Merck (MRK) shares, which climbed 1 to 133 3/4. The drug maker said it won FDA approval to sell the first treatment for migraines in quick dissolving tablet form.
Immunex Corp. (IMNX) rose 1 3/16 to 66 1/4. A study was released indicating the biotech company's cancer drug, Leukine, can help fight HIV.
Conversely, Agouron Pharmaceuticals (AGPH) fell 3 1/16 to 30 1/2 and Vertex Pharmaceuticals (VRTX) slid 5 1/8 to 22 1/2. A study released at the AIDS conference in Geneva showed Protease inhibitors used to treat HIV may be linked to serious side effects, such as diabetes and high cholesterol.
Snyder Communications (SNC) rose 1 5/8 to 44 as one of its U.K. subsidiaries was awarded a four-year contract by Warner-Lambert (WLA).
Dycom Industries (DY) slid 1 1/8 to 33 3/4 while MasTec Inc. (MTZ)climbed 2 1/8 to 23 7/8 after both firms received "outperform" ratings in new coverage at Morgan Stanley Dean Witter.
Silgan Holdings Inc. (SLGN) fell 2 1/8 to 28 and Advanced Health Corp. (ADVH) fell 3 3/4 to 5 1/2 after the companies posted profit warnings.
Separate profit warnings also weighed on shares of TBC Corp. (TBCC), down 3/4 to 6 5/8 and Ucar International (UCR), off 1 1/4 to 29 3/16.
Hilton Hotels Corp. (HLT), down 3 to 28 1/2, is expected to announce that it will acquire gambling assets of Grand Casinos (GND), which dipped 1 3/4 to 16 3/4.
Summit Holding Southeast (SHSE) gained 6 1/8 to 31 7/8 after Liberty Mutual Group agreed to buy the firm for $222.4 million, or about $33 per share.
The IPO of American Tower Corp. (AMT) rose 2 1/16 to 24 15/16.
Telebras (TBR) ADRs gained 1 7/16 to 109 3/16 as Brazil announced the order in which the 12 units of the telephone monopoly will be sold on July 29
|
