Thurs. Sept 9, 4:34 PM, Nasdaq ends higher on analysts' bullish views
NEW YORK, Sept 9 (Reuters) - Nasdaq stocks gained ground on Thursday, reversing Wednesday's losses, as analysts' upbeat assessments of the Internet, technology and drug sectors sparked a rally.
Advancing issues outpaced decliners by a slim margin of 120 issues on volume of about 1.03 billion shares.
The 40-share Dow Jones Internet index (^DJINET - news) climbed 7.36, or 3.43 percent, to close at 221.94. The American Stock Exchange's 48-share Internet index (^IIX - news) closed up 7.09 points, or 2.37 percent, at 306.64.
Ratings upgrades and positive comments from Wall Street analysts helped. The analysts' reports ''really put a bit of spark under these stocks,'' said Conley Turner, an analyst at Wall Street Strategies.
CIBC World Markets started coverage on two of Nasdaq's Internet stars: Yahoo! Inc. (Nasdaq:YHOO - news) and eBay Inc. (Nasdaq:EBAY - news). Internet portal Yahoo! jumped 9-1/4 to 162-11/16, and online auction house eBay rose 9-11/16 to 144-7/16.
On the down side, shares of Priceline.com Inc. (Nasdaq:PCLN - news) lost 5-3/32 to close at 58-5/32, just above its year low of 58. Morgan Stanley resumed coverage of the company, noting that Priceline stock may go through near-term volatility.
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Dollar/yen at 3-year lows
Bonds suffer as dollar cremated
By Julie Rannazzisi, CBS MarketWatch
Last Update: 6:39 PM ET Sep 9, 1999 Economic forecast
Banking stocks
NEW YORK (CBS.MW) -- The Treasury market softened Thursday as the dollar tumbled to three-year lows against the yen on evidence that the Japanese economy is healing.
Governments saw additional pressure from a swelling corporate supply calendar and rising commodity prices. Friday will see the release of the producer price index -- which is expected to have increased by 0.3 percent overall and by 0.1 percent at the core. The latter excludes the volatile food and energy components. The data is likely to set the tone for the market.
Japan's second quarter gross domestic product increased by 0.2 percent, startling the market, which had expected a contraction in the order of 0.2 percent to 0.4 percent. See full story.
The Q2 figures -- which come on the heels of the huge 2 percent gain posted in the first quarter -- suggest the Japanese economy is slowly but surely coming out of its rut. The question of whether the growth being witnessed is sustainable remains, but Japanese government officials have signaled that an extra budget to stimulate the economy would be passed in the fall, regardless of the GDP figures. It could total up to 10 trillion yen.
One thing's for sure. The GDP reading gave yen bulls more ammunition. Japanese officials were busy Thursday warning the market of possible intervention to prop up the dollar but their attempts were indeed futile.
The greenback -- which traded above the 111 level against the yen Wednesday -- fell over 2 yen immediately after the GDP news was released. Selling of dollars continued in U.S. trading as the buck plunged to a low of 107.61 yen, a level not seen since August 1996. The previous low for 1999 was at 108.22, reached on Jan. 11. The pair was recently trading at 108.03, off 2.8 percent from Wednesday's close. See latest currency rates.
Marcello Frustaci of Daiwa Securities said he doesn't anticipate any selling of Treasurys on the part of Japanese investors due to the greenback's woes.
David Ethridge, director of currency analysis at S&P's MMS International, said he wouldn't hold his breath for a BOJ intervention. Investment flows are clearly heading in Japan's direction and contrasting this would be a waste of the BOJ's dollars. See related story.
As for help from the U.S., Ethridge says don't count on it.
You can never say never, he added, but judging from Treasury Secretary Lawrence Summers' remarks against "manipulation" of foreign exchange markets, the U.S. isn't about to throw in the towel and help Japan weaken the yen.
And on Thursday, New York Fed President William McDonough said the fall in the dollar/yen rate was not significant for the U.S. economy.
More 'Fed talk' inundated the market Thursday, but bonds staged a muted reaction to the flurry of comments.
In prepared remarks to the National Economists Club in Washington D.C., Fed Governor Roger Ferguson said he doesn't see inflation as a problem at present. Ferguson went on to say that the Fed hasn't decided what it's next move on rates would be.
In addition, Ferguson said moves in foreign exchange markets were unlikely to spur an increase in U.S. inflation.
Fed Governor Edward Gramlich, who spoke at a Community Leader luncheon in Boise, Idaho, had some bond-friendly remarks. He said inflation remains low despite a tight labor market.
The 30-year bond fell 10/32 to yield 6.094 percent. The 10-year, meanwhile, was off 9/32 to yield 5.965 percent. The 5-year lost 5/32 to yield 5.836 percent. The 2-year shed 1/32 to yield 5.685 percent. The discount rate on the 52-week bill added 3 basis points to 5.02 percent. In the futures pit, the December Treasury bond contract lost 1/2 to reach 113-10.
In economic news, weekly jobless claims fell 4,000 to 286,000. Meanwhile, import prices rose 1.0 percent in August while export prices increased by 0.4 percent. See economic calendar and forecasts and historical economic data.
Commodity surge
The Treasury market was hurt by rising commodity prices Thursday. Crude prices rose to 31-month highs, getting a boost from the latest American Petroleum Institute inventory figures, which showed late Wednesday a drop in oil supplies that was much larger than the market had expected.
The institute, in fact, said supplies of crude fell 5.97 million barrels to total stocks of 311.7 million barrels during the week ended Sept. 3. That sizeable drop in supplies compares with expectations of a 2.5 million- to 3 million-barrel decrease.
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Thursday September 9 7:02 PM ET
Merrill Issues Top 10 Tech Stock Picks
By Eric Auchard
NEW YORK (Reuters) - Merrill Lynch, the No. 1 U.S. brokerage, Thursday named its 10 top technology stock picks, shunning volatile Internet stocks in favor of big suppliers of underlying software and hardware products and services.
In a conference call with investors late Thursday afternoon, Merrill analysts reeled off a list of traditional blue chip technology stocks including Big Blue itself, the International Business Machines Corp. (NYSE:IBM - news) The list was weighted toward makers of big computer systems, communications and semiconductor chips.
''We do feel most of these names do you give you Internet exposure but mostly through the infrastructure,'' Merrill Lynch's chief technology analyst Steve Milunovich said during a conference call with investors.
''When clients want technology exposure, we think these are our best 10 ideas,'' he said, noting the list is composed of top-rated stocks with at least a $1 billion market capitalization.
Traders and analysts said Merrill's list helped propel technology stocks higher, led by IBM, whose shares leaped $4 to $134-3/4, the best single-day move for the stock since July. IBM also benefited from upbeat comments by other Wall Street analysts about its computer services and storage businesses.
Milunovich said Merrill semiconductor analysts see the recent turnaround in the boom-or-bust computer chip business
as continuing to gain momentum.
He named Cisco Systems Inc. (Nasdaq:CSCO - news), the top supplier of Internet equipment, Intel Corp. (Nasdaq:INTC - news), the No. 1 computer chip maker, and IBM, the largest computer maker.
Motorola Inc. (NYSE:MOT - news), the leading U.S. wireless equipment maker, and Nortel Networks Corp. (NYSE:NT - news), the Canadian telecommunications giant, joined Texas Instruments Inc. (NYSE:TXN - news), a top maker of semiconductor communications chips.
Sun Microsystems Inc. (Nasdaq:SUNW - news), a leading maker of computers and software used to manage the Internet, and Oracle Corp. (Nasdaq:ORCL - news), the leading database software maker, were included on the list.
Also named as top technology picks were two leading suppliers of the equipment used to make computer chips, including segment bellwether Applied Materials Inc. (Nasdaq:AMAT - news) and Novellus Systems Inc. (Nasdaq:NVLS - news) .
Noticeably absent from the list was Microsoft Corp. (Nasdaq:MSFT - news), the world's largest software company, which awaits a ruling in the U.S. government antitrust trial against it and is fumbling to develop a coherent Internet strategy.
Also left off were top personal computer makers like Dell Computer Corp. (Nasdaq:DELL - news) and Compaq Computer Corp. (NYSE:CPQ - news), which have had trouble sustaining historic rates of growth.
Cisco rose $1 to close at $69-15/16. Applied Materials gained $2-3/8 to $79. Both trade on Nasdaq. Motorola added $1-1/8 to $98-11/16 on the NYSE. Nortel added C$3.60 to close at C$69.35 on the Toronto exchange.
Novellus added a 1/4 point to $66-3/8 in Nasdaq trade, while Texas Instruments was up the same fraction to $89-1/8 on the NYSE.
Sun Micro lost $1-1/4 to $84-3/16 while Oracle gave back 1/4 of a point to close at $44-1/16, both on Nasdaq.
Milunovich said the list, with a six- to 12-month time horizon, is designed for selective buyers looking to add a technology stock to their core holdings and investors looking to own an entire portfolio of high-growth stocks.
Also on the call, Steve Narker, senior director of equity markets, named the brokerage's ''favored 15 list'' of stocks, which included many of the top 10 tech picks, supplemented mostly by what might be grouped as retail ''lifestyle'' stocks.
Technology favorites included IBM, Oracle and Texas Instruments, along with EMC Corp. (NYSE:EMC - news), the top maker of large-scale data storage systems, Network Appliance Corp. (Nasdaq:NTAP - news), a maker of network data storage.
Also on the Merrill 15 list were Cablevision Systems Corp. (AMEX:CVC - news), the No. 6 U.S. cable television operator, CommScope Inc., a communications cable maker, and Echostar Communications Corp. (Nasdaq:DISH - news), the No. 2 U.S. provider of direct broadcast TV.
Retailers included Abercromie & Fitch Co., a youth clothing retailer, Best Buy Co. Inc., Circuit City Stores Inc. (NYSE:CC - news) and Tandy Corp. (NYSE:TAN - news), all top U.S. electronics retailers, luxury goods company Tiffany & Co. (NYSE:TIF - news) Inc. and Tricon Global Restaurants, owner of several popular fast-food restaurants. Rounding out the list was Providian Financial Corp. (NYSE:PVN - news), a consumer lender. |
