MARKET SNAPSHOT
Shares hold on to modest gains
Chips lead tech group higher
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 3:29 PM ET Jul 25, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - Technology issues, led by big-cap names, found their footing Tuesday after wobbling earlier in the session as investors nibbled on semiconductors after shunning the sector for five straight sessions.
"We're seeing a bit of rotation in the market. Chip stocks got oversold and we're now seeing some interest in the group," said Chris Wolfe, equity strategist at J.P. Morgan. "People are hunting for value in different sectors."
Inside the tech group, chip stocks led the advance in the tech sector. Computer hardware issues were modestly higher while Internet shares traded mixed. The broader market generated interest in brokerage, gold and utility sectors while drug, biotech, paper and transportation stocks slipped.
Meanwhile, Fed Chief Alan Greenspan testified on the U.S. economy before the House Banking Committee. His remarks are a repeat of Thursday's speech before the Senate Banking Committee, which sparked a scintillating rally on Wall Street. Greenspan gave no indication Tuesday that he's changed his mind since last week about the slowing economy. See full story.
The Dow Jones Industrial Average added 35 points, or 0.3 percent, to 10,719 at 2:36 p.m.
"I see more messiness in the market around economic releases," Wolfe said, referring to the bout of selling Tuesday morning following the release of some strong economic numbers.
"Right now, there's no pressing reason to [put money] into the market. Liquidity is starting to fade and you get a seasonal slowdown in fund inflows," Wolfe said.
The Dow's upside leaders were Boeing, AT&T, Honeywell, Philip Morris and McDonald's. Leading on the downside were shares of Microsoft, Hewlett-Packard, 3M, Home Depot and Procter & Gamble.
The Nasdaq Composite added 26 points, or 0.6 percent, to 4,007 while the Nasdaq 100 Index gained 50 points, or 1.3 percent, to 3,841.
"We has a period during which we saw a stealth summer rally -- but the conviction from institutions and retail investors wasn't there," remarked Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray.
"There's still a lot of ambiguity in the market's eyes regarding future earnings growth. People have turned defensive and remain worried about sequential revenue growth," Belski said, adding he sees room for improvement in the market in September and October as investors become more comfortable with earnings going forward.
The Standard & Poor's 500 Index added 0.4 percent while the Russell 2000 Index of small-capitalization stocks trimmed 0.5 percent.
Separately, volume stood at 720 million on the NYSE and at 1.08 billion on the Nasdaq Stock Market. Market breadth again deteriorated on the Nasdaq, with decliners pouncing on advancers by 22 to 16. But winners were in line with losers on the NYSE.
Data watch
The morning's dose of stronger-than-expected economic news put a damper on the market's optimism.
June existing home sales rose 2.8 percent to a 5.23 million rate, higher than the 5.01 million rate expected by a survey of economists conducted by CBS MarketWatch.com. View Economic Preview, economic calendar and forecasts and historical economic data.
"This was a strong number waiting to happen," Ian Shepherdson, chief U.S. economist at High Frequency Economics said of the housing fugures.
"Mortgage demand has been very strong in recent months and home sales have been soft only because of the lack of inventory. We think there is now every chance that home sales will continue to rise."
July consumer confidence rose to 141.7 versus June's reading of 139.2 and expectations for a reading of 138.8. Read story.
"Together with the rise in home sales, the data sit very uneasily with Greenspan's dovish tone. We continue to think rates will rise next month, and that consumers will only begin to slow their spending when they start to worry about their jobs," Shepherdson said.
Dow companies report
AT&T (T: news, msgs) reported a second-quarter profit from operations of 57 cents a share, four cents ahead of the First Call estimate. Including certain gains and charges, AT&T made 53 cents a share. AT&T posted a profit of 49 cents in the year-ago period. The stock gained 13/16 to 34 1/8. Read the story.
Exxon Mobil (XOM: news, msgs) had a profit from operations of $1.18 in the second quarter, beating the First Call estimate of $1.07 a share. The company registered earnings of 53 cents a share in the year-ago quarter. The stock lost 1 7/8 to 75 3/8. Read full story.
McDonald's, came in with second-quarter earnings of 39 cents a share, matching the First Call estimate. The company made 37 cents in the year-ago period. McDonald's (MCD: news, msgs)said it remains confident it will regain stronger sales momentum in the second half of the year and improve operating results. Shares rose 1 1/16 to 31 5/16.
Sector movers
Chips stocks managed to interrupt a five-day losing streak, with the Philadelphia Semiconductor Index ($SOX: news, msgs) up 2.1 percent.
Texas Instruments was among the upside movers, changing hands at 67 3/4, up 4 3/4 from its NYSE close. The company (TXN: news, msgs) registered after the close Monday second-quarter earnings of 31 cents share, beating the First Call estimate by a penny. See full story. Looking forward, Texas Instruments said it expects sequential revenue growth in its semiconductor business to accelerate in the third quarter -- despite seasonal pressure -- thanks to broad customer demand and strength in key markets such as wireless, catalog and broadband communications.
Shares of Dell Computer (DELL: news, msgs) improved after Monday's drubbing on concerns over revenue growth. The rebound helped to stabilize the Goldman Sachs Hardware Index ($GHA: news, msgs), which added 1.5 percent. Lehman Brothers' Dan Niles reiterated his "buy" rating on Dell on Tuesday. He believes there's upside potential to his second-quarter earnings-per-share forecast of 21 cents a share, adding that he'd take advantage of the recent sell-off in the stock. Shares added 9/16 to 47.
IBM shares (IBM: news, msgs) lost 13/16 to 111 11/16. Late Monday, Big Blue named two new top executives: Samuel Palmisano, president and chief operating officer and John Thomson, vice chairman, both effective Sept. 1. The move may help to set up IBM's power structure when Chief Executive Lou Gestner retires. Read the story.
Internet stocks traded in a mixed fashion as Amazon shares slumped, falling 1 3/64, or 2.5 percent, to 37 45/64. The stock, however, erased the brunt of its earlier losses. Merrill's Internet Holdrs (HHH: news, msgs) edged up 0.3 percent while the Goldman Sachs Internet Index ($GIN: news, msgs) slipped 0.5 percent. See Net Stocks
Amazon president and operating chief Joseph Galli is leaving Amazon to become CEO of VerticalNet (VERT: news, msgs). Mark Walsh, VerticalNet's chief executive and chairman, is to remain chairman but turn over his CEO title to Galli. See full story. Banc of America cut its rating on the stock to a "buy" from a "strong buy." See Rating Revisions.
Meanwhile, Amazon is set to unleash second-quarter earnings this week, with First Call estimating a loss of 35 cents a share. VerticalNet added 1 7/8 to 58 5/8. Among the winners in the Internet group were shares of Yahoo, up 5 1/2 to 138 1/16, and Ebay, up 1 7/8 to 57.
Drug stocks took a breather after Monday's hearty advance as the market digested a number of earnings reports from the group. The Amex Pharmaceutical Index ($DRG: news, msgs) lost 2.0 percent.
Late Monday, Pfizer (PFE: news, msgs) posted second-quarter earnings of 23 cents a share, beating the First Call estimate by a penny. The drug giant made 18 cents in the year-ago quarter. The stock fell 4 1/16 to 43 1/2. Pfizer saw its rating lowered to a "market perform" from a "strong buy" rating by Deutsche Banc Alex. Brown.
Schering-Plough came in with second-quarter earnings of 43 cents a share, matching the First Call estimate. The company made 37 cents in the year-ago period. The stock (SGP: news, msgs) lost 2 1/64 to 43 1/4. See full story. And Pharmacia Corp. (PHA: news, msgs) made 47 cents in its second quarter, in line with the First Call estimate. The company made 40 cents in the year-ago quarter. Shares rose 3 to 56.
A sell off in shares of Affymetrix following softer-than-expected earnings news weighed on the biotech sector, causing Merrill Lynch's Biotech Holdrs (BBH: news, msgs) to fall 3.6 percent. Affymetrix (AFFX: news, msgs) shares took a hit, shedding 20 to 174 1/2. Late Monday, the biotech concern posted a second-quarter loss of 22 cents a share, more than the First Call estimate of a loss of 15 cents a share. The company lost 33 cents in the year-ago quarter. See story. Also lower were shares of Human Genome Sciences, down 12 1/16 to 148 and Millennium Pharmaceutical, down 6 9/16 to 100 1/8.
In other earnings news, Akamai Technologies (AKAM: news, msgs) checked in with a second-quarter loss of 50 cents a share late Monday versus the First Call estimate of a loss of 57 cents a share. The company lost 32 cents in the year-ago quarter. The stock dropped 14, or about 13 percent, to 93 7/8. The stock is a component of Merrill's Internet Infrastructure Holdrs (IIH: news, msgs), which slipped 1.9 percent.
FreeMarkets boosted the business-to-business sector, pushing Merrill's B2B Holdrs (BHH: news, msgs) up 2.2 percent. FreeMarkets climbed 7, or 13 percent, to 60 1/2. The company (FMKT: news, msgs) posted a loss of 34 cents a share in its second quarter late Monday, narrower than the First Call estimate of a loss of 41 cents per share. Donaldson Lufkin & Jenrette's Jamie Kiggen raised his 2000 earnings-per-share estimate on the company to a loss of $1.43 from a loss of $1.53. The analyst has a $125 price target and "buy" rating on the stock.
Retail recovered after two days of losses and digested restructuring announcements from Circuit City and Kmart. The S&P Retail Index ($RLX: news, msgs) added 0.3 percent, relinquishing earlier losses.
Circuit City tumbled 5 3/4 to 26 7/8. The company (CC: news, msgs) said it was pushing appliances out of the stores to make room for the more profitable electronics products. And Kmart (KM: news, msgs) slipped 1/4 to 6 13/16 after announcing it will take a pre-tax charge of $750 million in the second quarter related to earnings shortfalls and the costs of closing 72 stores. The company said it will miss second-quarter and full-year earnings. It sees second-quarter earnings from operations in the range of 4 to 7 cents. First Call had estimated second-quarter earnings at 16 cents a share. Read related story.
Over in the online brokerage arena, Ameritrade (AMTD: news, msgs) checked in with a third-quarter profit of 3 cents a share, surpassing the First Call estimate calling for a loss of a penny a share. However, the results were lower than the profit of 5 cents a share posted in the year-ago quarter. The stock put on 15/16, or 7.7 percent, to 13 3/16. Other gainers included E-Trade, up 3/64 to 16 3/8, and Charles Schwab, up 5/16 to 36 5/8.
Specific movers
Qualcomm (QCOM: news, msgs) rose 4 3/4 to 68 3/8. Qualcomm announced Tuesday it's planning to spin off its $1 billion chip unit as a tax-free dividend to its shareholders. See story. Chase H&Q upped the company to a "buy" rating from a "market perform."
Over in the IPO arena, shares of Blue Martini Software shot up 162 percent, or 32 7/16 to 52 7/16 in their first day of trading. The company priced its shares at $20, above its previously anticipated range of $16 to $18. See IPO Report.
In merger news, Lucent Technologies is purchasing Spring Tide Networks Tuesday in a stock deal worth about $1.3 billion. Lucent said the firm is a leader in network switching equipment allowing service providers to set up virtual private networks. View full story. Lucent (LU: news, msgs) slipped 13/16 to 49 7/16, reaching a fresh 52-week lows of 47 3/8 in intra-day dealings.
RedHat shares (RHAT: news, msgs) tumbled 2 3/4, or 12 percent, to 21 after the company announced that its chief financial officer Harold Covert resigned to become CFO of Silicon Graphics. The stock was downgraded to a "market neutral rating" from a buy" by WR Hambrecht.
Treasury focus
Government prices were steady in another day of directionless trading.
The 10-year Treasury note was flat to yield 6.03 while the 30-year bond rose 1/8 to yield 5.805 percent. See Bond Report.
In the currency arena, the dollar gained 0.4 percent to 109.20 yen while euro/dollar climbed 0.5 percent to 0.9381. See latest currency rates.
In the commodity market, September crude added 23 cents to $28.25 while the Bridge CRB index slipped 0.40 to 218.36.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
