MARKET SNAPSHOT
Stocks can't hold on to gains
Volatile action for U.S. stocks
Bonds drop
By Julie Rannazzisi, CBS MarketWatch
Last Update: 2:24 PM ET Apr 17, 2000 Bond Report
NEW YORK (CBS.MW) -- The major indexes struggled to hold on to gains Monday in extremely choppy dealings, underscoring investors' nervousness following last week's drubbing.
Inside the market, Internet issues retreated while semiconductor, computer hardware and networking issues maintained gains. The broader market saw losses in biotech, gold, airline, utility, bank and brokerage sectors. The latter failed to benefit from a slew of positive earnings releases.
Investors remained very selective in their buying Monday, preferring shares of big-cap names to second- and third-tier names.
"I'd view the large-cap, quality growth stocks like the Intels and the Apples and IBMs as a buying opportunity. But the smaller names will continue to be volatile and probably have a negative bias," said John Shaughnessy, chief market strategist at Advest.
The Dow Industrials added 60 points, or 0.6 percent, to 10,366 at 2:24 p.m., led by Procter & Gamble, Johnson & Johnson and United Technologies. Downside leaders were AT&T, Home Depot and Alcoa. (See 3-month chart of Dow and Nasdaq.)
The Nasdaq Composite inched down 12 points, or 0.4 percent, to 3,308.
Shares of blue-chip tech stocks saw dip buying but came off session highs. Sun Microsystems (SUNW: news, msgs), which reported record quarterly results late last week, climbed up 5 to 81 1/2 while Oracle (ORCL: news, msgs) rose 4 3/8 to 66 7/8 and Cisco Systems (CSCO: news, msgs) put on 5 1/4 to 62 1/4.
Richard McCabe, Merrill Lynch's chief market analyst, said in a note to clients that interim rallies may begin, but such a move would not necessarily mean that the New Economy stocks are home free.
"We think that further downside tests are likely to develop before a major advance takes shape. By contrast, despite renewed volatility, the old
economy/value-style stocks are in what looks to be a bottoming process," McCabe continued.
"One of the technical conditions that concerns us in the current stock market environment is that sentiment indicators have reflected only moderate concern about downside risk in contrast to the usual extreme pessimism or caution at a convincing market bottom," McCabe said.
The Standard & Poor's 500 Index inched down 0.1 percent while the Russell 2000 Index of small-capitalization stocks shed 2.5 percent.
"There's been a huge swing in relative tech valuation from overvalued to undervalued. Typically, once a stock or industry becomes overvalued, it shoots through fair value to undervaluation before stabilizing. That's what we think is in the process of happening, at least to most of these big cap tech stocks," said Lehman Brother's Jeffrey Applegate in a note to clients.
"All this begs the question of whether this tech correction in over. Given the enormous swing in tech relative valuation, the modest improvement in tech relative to expected earnings-per-share growth and very robust local and global final demand environments for tech products, we think that the worst is over," Applegate continued.
Separately, Donaldson, Lufkin & Jenrette's Tom Galvin changed his asset allocation in a model portfolio, raising the stock portion to 90 percent from 80 percent. The cash portion was raised to 10 percent from 5 percent while taking out the 15 percent previously allocated to bonds.
Volume stood at 791 million on the NYSE and at 1.70 billion on the Nasdaq Stock Market. Market breadth remained negative despite the market's advance. Decliners outnumbering advancers by 21 to 9 on the Big Board and by 30 to 12 on the Nasdaq.
In the meantime, a barrage of corporate earnings are pouring in. Last week, solid quarterly reports couldn't keep the equity market afloat. The most compelling question for the market this week is whether good earnings will make a difference and bring in buyers.
In earnings news Monday, Dow stock Eastman Kodak (EK: news, msgs) checked in with a first-quarter profit from operations of 95 cents a share, 2 cents ahead of the First Call estimate. The stock was off 1 9/16 to 59 15/16.
Ford Motor (F: news, msgs) registered a first-quarter profit of $1.70 a share, easily beating the First Call estimate of $1.58 a share. The stock rose 3 3/4 to 56. See full story. Dain Rauscher Wessels lowered its price target to $80 from $87 but reiterated its "strong buy" recommendation. See Rating Revisions.
Meanwhile, quarterly results from the banks and brokerages were nothing short of stellar.
Dow component Citigroup handily beat expectations, posting a first-quarter profit from operations of $1.04 per share compared to the First Call forecast of 78 cents a share. See full story. The stock (C: news, msgs) rose 1/4 to 58 1/4.
Merrill Lynch (MER: news, msgs) registered a first-quarter profit of $2.38 a share, well ahead of the First Call estimate of $1.83 a share. The stock inched up 3/4 to 90 3/4.
Charles Schwab (SCH: news, msgs) posted earnings of 33 cents per share compared to the First Call estimate of 32 cents a share. The stock lost 1/2 to 40.
See full story.
Bank of America (BAC: news, msgs), meanwhile, registered first-quarter earnings of $1.33 per share, beating the First Call estimate of $1.24 per share. The stock added 1/4 to 50 3/16.
The Bank of New York unleashed earnings per share of 46 cents in the first quarter, a penny ahead of the First Call estimate. Shares (BK: news, msgs) added 1/2 to 39 15/16.
Eli Lilly (LLY: news, msgs) shares rose 2 1/16 to 69 1/2. The company posted first-quarter earnings of 63 cents per share, two pennies ahead of the First Call estimate. See story.
Sears shares fell 1/4 to 36 5/16. The company (S: news, msgs) posted a first-quarter profit of 65 cents a share, in line with the First Call estimate. See full story.
In the bond market, prices retreated as U.S. shares recovered. Treasurys have taken their cues from the stock market's moves over the past weeks.
There are no economic releases on tap for Monday. The week will be a quiet one on that front, with little news to provide direction. View economic calendar and forecasts and historical economic data.
Regional market
coverage
North America
Europe
Asia
ADR Report
Currency rates
Intl' Indexes
The 10-year Treasury note dropped 1 1/32 to yield 5.86 percent and the 30-year bond lost 1/2 to yield 5.94 percent. See Bond Report.
In currency markets, moves will likely be dictated by the stock market's gyrations. Dollar/yen was recently changing hands at 104.15, off 0.1 percent from the previous close, while euro/dollar lost 1.0 percent to 0.9549.
In the commodity arena, May crude added 29 cents to $25.86 while the Bridge CRB index inched up 0.97 to 212.08. See full story and view latest commodity prices.
Julie Rannazzisi is Markets Editor for CBS MarketWatch.
|
