Rohit, I posted the entire Cramer comments in #7552. Here is the entire article in #7550 (nothing else directly relevant to Brazil)
thestreet.com
Market Roundup: Rough Week
Oscillates Wildly to an End
By Aaron L. Task
Senior Writer
9/4/98 6:40 PM ET
This isn't your father's pre-holiday trading. Old dad's jaw is
doubtless scraping the pavement right now after a fairly
subdued trading session turned frantic in the final 90
minutes. Growing worries about Latin America ripped the
stitches out of a slowly bleeding stock market
mid-afternoon, but an intensive dose of buy orders in the final
30 minutes helped revive the ailing patient.
Major Indices
INDEX
CHANGE
%
VALUE
YR TO DATE
DOW
41.97
-0.6%
7640.25
-3.4%
S&P 500
8.37
-0.9%
973.89
+0.4%
NASDAQ
5.34
-0.3%
1566.52
-0.2%
RUSSELL
2000
0.78
+0.2%
347.07
-20.6%
TREASURY BOND
CHANGE
VALUE
YIELD
30-YEAR
+ 8/32
103 81/32
5.285%
Financial stocks took the brunt of Latin America-related
concerns, but big retailers and drug makers also suffered.
Strength in oil stocks and big technology names such as
Intel (INTC:Nasdaq) prevented wider damage. Moreover,
commodity-related stocks continued a stealth rally from their
deep declines.
The Dow Jones Industrial Average emerged from a
relatively subdued morning session with modest losses, only
to tumble sharply as the afternoon unfolded. Just after
trading in Brazil's stock marketed was halted around 2 p.m.
EDT, the blue-chip index fell precipitously. At its nadir, the
index slid to as low as 7495.81, just above the 7470.38 level
that signals a 20% decline from its all-time high -- a
technical bear-market indication. Avoiding the fate already
suffered by other proxies, the Dow closed off 41.97, or 0.6%,
at 7640.25.
Finanical stocks such as American Express (AXP:NYSE)
did the greatest damage to the Dow, offset by strength in oil
names Exxon (XON:NYSE) and Chevron (CHV:NYSE).
The S&P 500 tumbled as low as 956.51 before recovering to
close off 8.37, or 0.9%, at 973.89. The Nasdaq Composite
Index shed 5.34, or 0.3%, to 1566.52 after trading as low as
1543.63. The Russell 2000 was the relatively strongest
performer even at the lows today and managed to close up
0.78, or 0.2%, at 347.07.
In New York Stock Exchange trading, 780.4 million shares
changed hands while declining stocks reversed midday
trends to edge advancers 1,512 to 1,467. In Nasdaq Stock
Market activity, 626.7 million shares changed hands while
losers led 2,124 to 2,022. New lows led new high 358 to 9
on the Big Board and 449 to 2 in over-the-counter trading.
'The volatility is certainly incredible'
"I wasn't shocked we could stage some kind of a rally," said
Bill Meehan, chief market analyst at Cantor Fitzgerald.
"With so many people of the opinion there was going to be a
lot of people looking to lighten up, they caught some people
too short. The volatility is certainly incredible." The
September S&P 500 futures contract moved more than 4.5
points in the first 25 five-minute periods of yesterday's
session, Meehan said. That performance was repeated in
the first 12 five-minute chunks of today's action, when he
stopped keeping track.
"I would expect that the optimists will have glowing things to
say about how the market came back and we held Tuesday
lows," the strategist said, further noting the Russell 2000's
positive gain and the narrow victory by declining stocks. "But
one of the things that disturbs me, other than the ugly
technical picture of this market, is analysts' expectations
beyond this quarter seem to be way out of whack with
reality. That might change past Labor Day when we get third
quarter earnings reports and guidance. Perhaps then we
could put in a bottom. Even with the damage done, this is
not a cheap market."
Meehan continues to advise investors to raise cash, remain
patient and perhaps only "nibble" at some small-cap values
that have been created, although he declined to name
specific stocks. "We will take out Tuesday's lows and cause
more consternation and potentially some panic," he
predicts.
Latin woes leaping to the fore
Going forward, the strategist said financial woes in Latin
America will be the main focus on Wall Street, as Russia
has largely been discounted. In the wake of yesterday's
downgrade of its debt rating by Moody's Investors Service,
Brazil's Bovespa fell a further 10% today, triggering a
trading halt. Lately, the index was quoted down a more
modest 5.9%. In sympathy, Venezuela's main exchange
shed 7.5%.
"You can play it both ways," said Michael Scarlatos,
international economist at Bankers Trust. "One, Latin
America has not melted down as much as other emerging
markets and they're in better shape fundamentally than
others. Or you can say it hasn't been hit yet, making it the
next victim in a long line."
A saving grace, Scarlatos said, is that Latin America is
somewhat "on the back burner" compared with
developments in Russia, where the Duma will vote Monday
on Viktor Chernomyrdin's nomination for prime minister;
Hong Kong, whose de facto central bank meets tomorrow
with representatives from major Western banks; and
tonight's meeting of Treasury Secretary Robert Rubin, Fed
Chairman Alan Greenspan, and Japanese Finance Minister
Kiichi Miyazawa. In addition to the continued fallout in
Washington from the Monica Lewinsky scandal.
"Without a doubt, Latin America is suffering," Scarlatos
said. "But the crises would be worse if not for other crises.
The Moody's downgrade would have received more attention
had the spotlight been more on." This is good news?
The action today did little to assuage the already jangled
nerves of many market participants.
A hedgie holds off on big bets
"Currently we're on the sidelines," said a researcher at a
small New York-based hedge fund. Despite no direct
emerging-markets exposure, the fund has been "active" in
telecommunications stocks and has thus experienced
"some pain" due to liquidations by other holders the source
said. The experienced has left the hedge fund's managers,
like many investors, a little gun-shy these days, the source
said, requesting anonymity.
"We see many good values out there in banks, financials,
specialty chemicals, airlines and oil service, but don't feel
like its time to buy yet," he said. "Look at the financials
today -- you could have made the case that they were cheap
three days ago. These things are cheap, but we don't have
the conviction yet."
Indeed, financial stocks continue to cheapen. The
Philadelphia Stock Exchange/KBW Bank Index fell
3.8% while the American Stock Exchange Broker/Dealer
Index tumbled 2.3%. Conversely, rising gold prices lifted
precious metals stocks for a second straight day, leading
the Amex Gold Bugs Index up 11.1%.
Among other indices, the Dow Jones Transportation
Average fell 7.72, or 0.3%, to 2616.75; the Dow Jones
Utility Average lost 0.69 to 271.67; and the American
Stock Exchange Composite Index rose 4.01, or 0.7%, to
602.71.
For the week, the Dow industrials lost 411.43, or 5.1%; the
S&P 500 lost 53.36, or 5.2%; the Nasdaq Comp lost 73.16,
or 4.5%; the Russell 2000 lost 11.47, or 3.2%; the Dow
transports lost 210.25, or 7.4%; the Dow utilities shed
12.07, or 4.3%; and the Amex Composite rose 0.13, or
0.02%.
Global uncertainties again buoyed the bond market, but the
dollar's weakness versus the yen kept the gains in check in
a shortened, pre-holiday session. The price of the
benchmark 30-year bond rose 8/32 to 103 8/32, sending its
yield down to 5.29%.
Elsewhere in North American equities today, the Toronto
Stock Exchange 300 gained 31.32, or 0.6%, to 5742.50
and the Mexican Stock Exchange IPC Index fell 57.22, or
1.8%, to 3045.16. For the week, the TSE 300 lost 23.81, or
0.4%, and the IPC lost 10.55, or 0.3%.
Friday's Company Report
By Heather Moore
Staff Reporter
(Earnings estimates from First Call; new highs and lows on
a closing basis unless otherwise specified.)
J.P. Morgan (JPM:NYSE) tumbled 1 13/16 to a 52-week
low of 86 15/16 after CIBC Oppenheimer dropped the stock
to hold from strong buy, and cut its 1998 earnings view for
the company to $6.27 from $7.77 per share and its 1999
view to $7.20 from $9.
The firm also slashed its earnings estimates for a large
collection of other financial stocks, many of which recently
have disclosed major trading losses from overseas
exposure:
Bankers Trust (BT:NYSE) picked up 9/16 to 67 1/16
after Oppenheimer cut its 1998 estimate to $3.70
from $8.32 and its 1999 view to $7.60 from $9.50.
Bear Stearns (BSC:NYSE) lost 15/16 to 35 5/16
after Oppenheimer cut its 1999 estimate to $4.20
from $5.04 and its 2000 view to $4.75 from $5.70.
Chase Manhattan (CMB:NYSE) fell 3 7/8, or 7.9%,
to an annual low of 45 3/8 after Oppenheimer cut its
1998 estimate to $4.55 from $4.88 and its 1999 view
to $5.05 from $5.60.
Lehman Brothers (LEH:NYSE) lowered 5/16 to 38
1/16 after Oppenheimer cut its 1998 estimate to
$6.25 from $6.90 and its 1999 view to $5.80 from
$7.25.
Merrill Lynch (MER:NYSE) lost 2 3/16 to 61 11/16
after Oppenheimer cut its 1998 estimate to $4.88
from $5.19 and its 1999 view to $5.40 from $6.
Morgan Stanley Dean Witter (MWD:NYSE) fell 3
3/8, or 6.3%, to 50 1/4 after Oppenheimer cut its
1998 estimate to $4.62 from $5.07 and its 1999 view
to $5.10 from $5.70.
PaineWebber (PWJ:NYSE) lost 1 15/16, or 5.7%,
to 32 1/8 after Oppenheimer cut its 1998 estimate to
$3 from $3.20 and its 1999 view to $3.25 from $3.50.
Travelers Group (TRV:NYSE) lowered 2 1/16, or
5%, to an annual low of 39 1/16 and Citicorp
(CCI:NYSE) lowered 6, or 6.1%, to an annual low of
92 1/2 after Oppenheimer cuts its 1998 estimate for
the merged company to $3.18 from $3.54 and its
1999 view to $3.85 from $4.24.
PeopleSoft (PSFT:Nasdaq) shares jumped after a
reassuring conference call and an analyst upgrade
yesterday.
During the unprecedented conference call, PeopleSoft
executives told shareholders and analysts that the company
would grow with help of international sales of its PeopleSoft
version 7.5 software. Also, the company said investors can
look for acquisitions in the next six to nine months of
companies with industry specific applications.
PeopleSoft says that it has never held a
non-earnings-related conference call but felt the need to
quell recent fears that the company's growth was slowing in
light of the recent market downturn. CEO Dave Duffield
reiterated the company's sales growth target of 60% to 65%
next year. On Aug. 28, the stock hit a year low of 26 7/8,
down from the year's high of 57 7/16 on April 20.
Robert Sun, an analyst at discount broker Sunlogic
Securities, also upgraded the stock yesterday to buy from
above average before the call. Sun says he expects
PeopleSoft's third-quarter net income to increase 90% to
$33 million. PeopleSoft's third-quarter earnings report is due
after the close of business Oct. 20. He raised his earnings
per share forecasts to 65 cents for fiscal 1998 and 95 cents
next year. Those estimates are each up a penny, he says.
Sunlogic has no underwriting relationship with PeopleSoft.
All other analysts maintained their ratings, which ranged
from holds to buys. "There wasn't anything tremendously
new on it (the conference call), but it was a good sign to
investors with so many people in one room willing to open up
about the company," said Jim Moore, analyst at BT Alex.
Brown. BT Alex. Brown has not done any investment
banking for PeopleSoft.
PeopleSoft shares ended up on a day the overall stock
market eased. The shares gained 1 5/16, or nearly 4.5%, to
30 15/16 but were down from their daily high of 32 3/4.
-- Medora Lee
Mergers, acquisitions and joint ventures
Avid Technology (AVID:Nasdaq) swelled 1 1/4 to 30 1/8
after setting a strategic alliance with Tektronix (TEK:NYSE)
to help broadcasters make the move from analog to digital
production. Tektronix sliced off 5/16 to 15 3/8.
Earnings/revenue reports and previews
Cambridge Technology Partners (CATP:Nasdaq) plunged
7 3/4, or 22.1%, to an annual low of 27 3/8 after its CFO
said that, because of project delays caused by customer
concerns about Year 2000 computer issues, he sees the
company's 1999 revenue growth dropping by 40% to 45%.
He said he's comfortable with an annual earnings estimate
between $1.35 and $1.40 per share. The 19-analyst forecast
called for 1999 earnings of $1.39. Adams Harkness cut the
stock to attractive from buy.
Larscom (LARS:Nasdaq) collapsed 1 1/8, or 29%, to an
all-time low of 2 7/8 after saying last night that because of a
slowdown in orders, it expects to report a third-quarter loss
between 13 cents and 15 cents per share and a similar loss
in its fourth quarter. The four-analyst view called for
third-quarter earnings of 4 cents per share vs. the
year-earlier 14 cents, and fourth-quarter earnings of 9 cents
vs. the year-ago 14 cents.
Breed Technologies (BDT:NYSE) shot up 1 15/16, or
27.9%, to 8 7/8 after agreeing to restate its fourth-quarter
and full-year earnings. The company said the revised results
will reflect accounting for the write-down of goodwill and
certain long-lived assets and that they will not have a
material adverse effect. On Aug. 31, the company delayed
its fourth-quarter earnings report.
Circuit City Group (CC:NYSE) shaved off 7/8 to 30 13/16
after saying its same-store August sales rose 4% for the
month. CarMax Group (KMX:NYSE), Circuit City's
car-retailing unit, hopped 3/16 to 7 1/2 after reporting a
same-store decline of 6%.
Offerings and stock actions
Cotelligent (CGZ:NYSE) flourished 1, or 9.3%, to 11 3/4
after last night approving a buyback plan of up to 2 million
shares. A.G. Edwards upgraded the stock to buy from
attractive.
Bellwether Exploration (BELW:Nasdaq) grew 13/32, or
8.4%, to 5 1/2 after setting a $5 million stock-buyback
program.
Trimble Navigation (TRMB:Nasdaq) rose 11/16, or 6.9%,
to 10 5/8 after saying it restarted a suspended 1
million-share buyback plan.
Analyst actions
Delta Financial (DFC:NYSE) plummeted 1 7/8, or 23.1%,
to an all-time low of 6 1/4 after Salomon Smith Barney
lowered it to outperform from buy, saying adverse conditions
in the asset-backed market could strain the company's
earnings for two to three quarters. The five-analyst First Call
outlook called for third-quarter earnings of 45 cents per
share, vs. the year-ago 51 cents, and fourth-quarter earnings
of 46 cents, vs. the year-ago 54 cents.
Penske Motorsports (SPWY:Nasdaq) descended 2 5/8, or
12.3%, to an all-time low of 19 on worries about its
second-half earnings and a downgrade to buy from strong
buy from J.C. Bradford.
Omnipoint (OMPT:Nasdaq) dived 1, or 9%, to 10 1/4 after
Credit Suisse First Boston cut the stock to hold from buy.
Last night, the company announced that Brad Sparks
resigned as CFO to hold the same position at privately held
Wam!Net.
Pfizer (PFE:NYSE) deflated 4 1/2 to 95 3/8 after Morgan
Stanley Dean Witter cut it to neutral from outperform.
TheStreet.com pointed out that new prescriptions for the
company's Viagra anti-impotence drug were steadily
dropping in an Aug. 25 story.
Ryder System (R:NYSE) advanced 15/16 to 20 15/16 after
Morgan Stanley Dean Witter upped it to outperform from
neutral.
NuCO2 (NUCO:Nasdaq) dropped 7/16, or 6.6%, to 6 11/32
after Raymond James slashed it to neutral from buy.
Information Holdings (IHI:NYSE) expanded 9/16, or 6.6%,
to 9 1/16 after Merrill Lynch started coverage with an
intermediate-term accumulate and a long-term buy.
Hong Kong Telecommunications (HKT:NYSE ADR) rose
15/16, or 5.3%, to 18 1/2 after Lehman Brothers pushed it
to outperform from neutral.
Sunglass Hut (RAYS:Nasdaq) lowered 9/32 to an annual
low of 5 17/32 after Gruntal downgraded it to buy from
strong buy. The firm cut its third-quarter outlook for the
company to a loss of 2 cents per share from breakeven, its
fourth-quarter view to a profit of 4 cents from 6 cents, and its
full-year view to a profit of 43 cents from 47 cents. The
eight-analyst First Call forecast calls for a third-quarter loss
of 1 cent, vs. the year-ago loss of 9 cents, a fourth-quarter
profit of 5 cents, vs. the year-ago loss of $1.26, and 1999
earnings of 45 cents, vs. 1998's loss of $1.06.
Miscellany
AutoCyte (ACYT:Nasdaq) sank 1 13/16, or 34.9%, to
all-time low of 3 7/16 after the Food and Drug
Administration asked for additional information to support
its premarket approval application for the company's Prep
product. Prep is designed to produce liquid-based
preparation Pap smears. Warburg Dillon Read cut the
stock to hold from strong buy.
Interneuron Pharmaceuticals (IPIC:Nasdaq) jumped 1/2,
or 19.1%, to 3 3/16 after last night announcing a $15 million
settlement resolving claims against the company by those
who used Redux, an antiobesity drug that was withdrawn
from the market in September 1997.
Elf-Aquitaine (ELF:NYSE ADR) climbed 3 5/16, or 6.1%, to
57 1/2 and Total (TOT:NYSE ADR) climbed 3 3/8, or 6.6%,
to 54 7/8 on news of a rise in crude oil prices and positive
half-year earnings reports. Royal Dutch (RD:NYSE ADR)
rose 2 5/16, or 5.1%, to 47 3/4, Chevron (CHV:NYSE) rose
2 3/16 to 77 7/8 and British Petroleum (BP:NYSE ADR)
rose 2 5/8 to 76 7/8.
After challenging Intel's (INTC:Nasdaq) influence over a key
piece of technology within the PC, Hewlett-Packard
(HWP:NYSE) added 7/16 to 50 7/16, Compaq (CPQ:NYSE)
closed flat at 29 11/16 and IBM (IBM:NYSE) slipped 2 3/8 to
119 3/8. Intel added 1 7/16 to 78 1/4.
Microsoft (MSFT:Nasdaq) slid 2 11/16 to 96 5/8 after a
federal judge ordered it to turn over new materials that
government lawyers contend could help the feds' antitrust
case against the software giant. |
