MARKET SNAPSHOT
Market to take a break?
Stocks set for slightly lower open
By Julie Rannazzisi CBS MarketWatch
Last Update: 8:07 AM ET May 31, 2000
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NEW YORK (CBS.MW) -- The U.S. equity markets may take a breather Wednesday, with the futures markets pointing to a mildly lower open following Tuesday's vigorous post-holiday rally.
June S&P 500 futures shed 4.10 points, or 0.3 percent, and were trading roughly 3.80 points above fair value, according to HL Camp & Co. Nasdaq futures, meanwhile, lost 45.00 points, or 1.3 percent.
In merger news, Lucent Technologies confirmed Wednesday it's buying privately-held Chromatis Networks in a stock deal valued at $4.5 billion. The purchase will boost Lucent's optical networking business. The deal, announced in press reports earlier this week, was widely expected. See full story. The acquisition is expected to dilute Lucent's pro forma earnings per share for ongoing operations by about two cents in fiscal 2000 and roughly five cents in fiscal 2001. Lucent's stock closed up 2 7/16 to 58 3/16 on Tuesday.
In the bond market, prices were a touch higher with gains clustered in the long end of the curve.
The 10-year Treasury note added 6/32 to yield 6.35 percent while the 30-year bond rose 7/32 to yield 6.07 percent.
On the economic front, April new homes sales will be out, expected at 935,000. Also set for release are April leading economic indicators and the Chicago Purchasing Managers index for May. See Economic Forecast, economic calendar and forecasts and historical economic data.
In the currency sector, dollar/yen gained 0.7 percent to 107.32 while euro/dollar inched up 0.1 percent to 0.9295.
Tuesday's market activity
It was like old times on Wall Street Tuesday.
Investors forgot Alan Greenspan for at least one day, re-ignited their love affair with tech stocks, and gave the Nasdaq its best percentage gain ever.
Tech stocks led the low-volume rally, but almost every sector and index chalked up a healthy gain.
The Nasdaq Composite gained 254.22 points, or 7.9 percent, to 3,459.33 while the Dow Industrial Average rose 227.89 points, or 2.2 percent, to 10,527.13. The Standard & Poor's 500 Index climbed 44.43 points, or 3.2 percent, to 1,422.45. The Wilshire Total Market index, the broadest market measure, gained 3.7 percent to 13,080.63.
The gain on the Nasdaq was the largest ever, beating the 7.3 percentage point gain on Oct. 21, 1987, when the market rebounded from Black Monday. The point gain just missed the record of 254.41 set five weeks ago.
"The only disturbing thing is the lack of volume," said Art Hogan, chief market strategist at Jefferies & Co.
Almost all sectors participated in the rally. Semiconductors, computers ($IXCO: news, msgs), Internets ($GIN: news, msgs), telecom ($IXTC: news, msgs), and biotechs ($IXBT: news, msgs) led the advance. Drug stocks ($DRG: news, msgs) were among the few decliners.
"The rally is pretty much across the board," said Peter Cardillo, chief strategist at Westfalia Investments.
Chip stocks ($SOX: news, msgs) jumped 11.1 percent after getting a boost from reports that prices of DRAM semiconductors had risen nearly 6 percent. The sector was also helped by analysts at Lehman Brothers and PaineWebber, who starting coverage of Micron (MU: news, msgs) and Texas Instruments (TXN: news, msgs). See related story.
The Internet backbone stocks were another big winner. The Merrill Lynch holders in the sector (IIH: news, msgs) soared 13.4 percent to 45 15/16. See related story.
The Dow Utilities (UTIL: news, msgs) fell 2.72 points, or 0.8 percent, to 324.74. The Dow Transportation average ($TRAN: news, msgs) gained 54.15 points, or 2 percent, to 2,741.70.
"It feels pretty good," said Bill Schneider, head of block trading at UBS Warburg. "We've got some people who've been on the sidelines now getting back to work."
"I'll take it any day of the week," said Hogan, who believes the Federal Reserve will still plague the market. If the Fed holds off on another rate hike in June, "we're setting up for a nice rally. I wouldn't mind if it started today and never stopped."
Advancers led decliners on the Big Board and the Nasdaq by two to one. Volume was light, with 821 million shares trading hands on the New York Stock Exchange while 1.44 billion trades were recorded on Nasdaq.
For most of the day it looked like it'd be one of the 10 lowest volume days of the year for the Nasdaq before programming trading kicked in. Even so, "the volume is better than you'd expect on the Tuesday after a long weekend," Schneider said.
"Perhaps this is meaningless because of the low volume, but it's a lot more fun to watch on the upside," said Ned Collins, head of trading at Daiwa Securities.
"We had one primary thought as we came in this morning: that the market was in a drastically oversold situation," Collins said. "There were so many cynics out there."
"We're seeing people come in and pick up some of these bargains," Cardillo said. "It's some institutions, some individuals, traders -- just about everybody."
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Among shares that gained, VoiceStream Wireless (VSTR: news, msgs) climbed 19 1/2 to 119 7/8 on a media report that Japan's cellular giant NTT DoCoMo would take a 15 to 20 percent stake in the company for up to approximately $4.8 billion. See related story.
Lucent Technologies (LU: news, msgs) added 2 3/8 to 58 1/8. The company is in talks to buy privately held optical equipment maker Chromatis Networks for more than $5 billion in stock, according to several media reports over the weekend. See related story. Lucent could pay between $5.5 billion and $5.7 billion in stock for Chromatis, stated reports from Reuters and from the Financial Times.
Vodafone (VOD: news, msgs) gained 4 7/16 to 46 7/16 as France Telecom (FTE: news, msgs) announced its $38 billion offer for Orange. The French telephone giant added 8 9/16 to 139 9/16. See related story.
Metromedia Fiber Network (MFNX: news, msgs) soared 5 11/16 to 31 3/16 after inking a deal with SBC Communications (SBC: news, msgs) to lease its fiberoptic network for 20 years for $432 million. See related story.
Qualcomm reversed earlier losses, gaining 10 5/16 to 76 3/8, after falling sharply to 60 earlier. See related story. Other telecom equipment makers were also higher. Nokia (NOK: news, msgs) rose 3 7/8 to 51 7/8, Ericsson (ERICY: news, msgs) jumped 2 3/8 to 21 and Alcatel (ALA: news, msgs) gained 5 15/16 to 54 15/16.
Also, Dow component IBM (IBM: news, msgs) rose 4 to 110 15/16. Big Blue is expected to announce a new business-to-business Internet marketplace with 10 major telecommunications and electronics companies, according to the Associated Press. See related story.
Cadence Design Systems (CDN: news, msgs) was one of the most active stocks on the Big Board, gaining 1 7/8 to 16 3/16 on fallout from an analyst meeting on Thursday.
In other tech stocks seeing activity, America Online (AOL: news, msgs) jumped 5 1/16 to 53 9/16, Cisco Systems (CSCO: news, msgs) rose 4 15/16 to 59 7/8, Microsoft (MSFT: news, msgs) tacked on 1 15/16 to 63 3/8, Oracle (ORCL: news, msgs) gained 7 3/16 to 74 3/16 and Yahoo (YHOO: news, msgs) stepped up 4 15/16 to 117.
Office Depot (ODP: news, msgs) shed another 5/8 to 7 after a profit warning on Friday. See related story.
Treasury market
Treasurys were a touch weaker, getting a double whammy from strong economic news and the strong stock market.
The benchmark 10-year Treasury note was off 12/32 with its yield at 6.38 percent. The 30-year bond eased 12/32 to yield 6.09 percent. Moving down the yield curve, the 5-year was down 6/32 at 6.62 percent. The 2-year shed 4/32 at 6.74 percent.
The bond market was in a wait-and-see mode ahead of a big week for economic data, starting with the release of the consumer confidence index.
The Conference Board said its index jumped back to near-record highs in May, confounding economists who figured that the stock market's volatility and higher interest rates would begin to erode optimism in the household sector. See related story.
"It's a negative for bonds, because people are still feeling good and that'll mean higher interest rates," Westfalia's Cardillo said. "On the other hand, the economy is still strong and corporate profits will do well."
The big enchilada of economic data comes Friday with the May jobs report. See Economic Forecast, economic calendar and forecasts and historical economic data.
In the currency arena, the dollar lost 0.5 percent to 106.44 yen while the euro rallied 0.4 percent to 93.010 cents after creeping past 94 cents, the highest since mid-April.
In the commodity market, July crude increased 35 cents to $30.35 while the Bridge CRB index fell 1.59 to 223.39. View latest commodity prices.
Julie Rannazzisi is markets editor for CBS MarketWatch. |
