MARKET SNAPSHOT
Smart gains for Nasdaq
Big-cap techs lead the advance
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 4:58 PM ET Jul 25, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - Technology stocks were back in favor Tuesday, helping the Nasdaq score smart gains after sputtering during the past couple of trading sessions. Crucial to the recovery was buying interest in chip stocks, a sector that had been shunned by investors over the past five days.
A solid showing in some of the big-cap tech names, such as Sun Microsystems -- which reached a fresh 52-week high -- Cisco Systems, Motorola and Intel, helped the Nasdaq 100 outpace the Nasdaq by a wide margin throughout the session.
"We're witnessing a big-cap, blue-chip kind of rally Tuesday," remarked Peter Cardillo, chief strategist at Westfalia Investments.
"We're seeing a bit of rotation in the market. Chip stocks got oversold and we're now seeing some interest in the group," observed Chris Wolfe, equity strategist at J.P. Morgan. "People are hunting for value in different sectors."
Inside the tech group, chip stocks paced the advance in the tech sector. Computer hardware and Internet issues also climbed. The broader market saw heavy gains in the brokerage sector, which rallied late in the session. Retail, bank and utility issues edged higher while biotech, drug, paper and transportation stocks slipped.
The Dow Jones Industrial Average added 14.85 points, or 0.1 percent, to 10,699.97 after rising as much as 64 points during the session.
"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 Honeywell, McDonald's, Philip Morris, Boeing and Intel. Leading on the downside were shares of 3M, Hewlett-Packard, Exxon Mobil, 3M and Microsoft.
The Nasdaq Composite added 48 points, or 1.2 percent, to 4,029.57 while the Nasdaq 100 Index gained 74.77 points, or 2.0 percent, to 3,865.39.
Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray, believes the market lacks conviction both on the institutional and retail side.
"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 0.7 percent while the Russell 2000 Index of small-capitalization stocks ended near flat levels, up 0.08 point.
Separately, volume stood at 968 million on the NYSE and at 1.45 billion on the Nasdaq Stock Market. Market breadth deteriorated on the Nasdaq even as the index advanced, with decliners outnumbering advancers by 21 to 18. But winners beat losers by 15 to 14 on the NYSE.
Data watch
The morning's dose of stronger-than-expected economic news initially put a lid 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 figures.
"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."
Meanwhile, 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 [Fed Chief] Alan 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.
Meanwhile, Greenspan testified on the U.S. economy before the House Banking Committee Tuesday morning. 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 about the slowing economy since last week. See full story.
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 5/8 to 33 15/16. 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 $1.07 a share. The company registered earnings of 53 cents a share in the year-ago quarter. The stock lost 1 7/8 to 75 3/8. Read full story.
McDonald's checked in with second-quarter earnings of 39 cents a share, matching the First Call estimate. The company made 37 cents in the year-ago period. McDonald's (MCD: news, msgs)said it remains confident it will regain stronger sales momentum in the second half of the year and improve operating results. Shares rose 1 1/16 to 31 5/16.
Sector movers
Chips stocks managed to interrupt a five-day losing streak, with the Philadelphia Semiconductor Index ($SOX: news, msgs) up 2.7 percent Tuesday.
Texas Instruments was among the upside movers, changing hands at 67, up 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 ($GHA: news, msgs), which added 1.6 percent. Lehman Brothers' Dan Niles reiterated his "buy" rating on Dell Tuesday. He believes there's upside potential to his second-quarter earnings-per-share forecast of 21 cents a share, adding that he'd take advantage of the recent sell-off in the stock. Dell added 3/8 to 46 13/16.
IBM shares (IBM: news, msgs) lost 3/4 to 111 3/4. Late Monday, Big Blue named two new top executives: Samuel Palmisano, president and chief operating officer and John Thomson, vice chairman, both effective Sept. 1. The move may help to set up IBM's power structure when Chief Executive Lou Gestner retires. Read the story.
Internet stocks traded higher despite the weight from a drop in shares of Amazon.com. The stock fell 1 1/8, or 2.9 percent, to 37 5/8, erasing the brunt of its earlier losses. Merrill's Internet Holdrs (HHH: news, msgs) gained 1.3 percent while the Goldman Sachs Internet Index ($GIN: news, msgs) edged up 0.1 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 5/8 to 57 3/8. Among the winners in the Internet group were shares of Yahoo, up 5 7/16 to 138, and Lycos, up 2 13/16 to 59 11/16.
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 1.9 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 1 61/64 to 43 5/16. 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 2 5/8 to 55 5/8.
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 4.5 percent. Affymetrix (AFFX: news, msgs) shares took a hit, shedding 16.3 percent, or 31 11/16 to 162 13/16. 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 15 3/16 to 144 7/8, and Millennium Pharmaceutical, down 8 5/8 to 108 1/16.
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 22 7/8, or about 21 percent, to 85. The stock is a component of Merrill's Internet Infrastructure Holdrs (IIH: news, msgs), which slipped 0.7 percent.
A rise in shares of FreeMarkets boosted the business-to-business sector during the trading session, with Merrill's B2B Holdrs (BHH: news, msgs) up 0.9 percent. FreeMarkets climbed 5/8 to 54 1/8. 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 $125 price target and "buy" rating on the stock.
Retail shares recovered after two days of losses and digested restructuring announcements from Circuit City and Kmart. The S&P Retail Index ($RLX: news, msgs) added 0.6 percent, relinquishing earlier losses.
Circuit City tumbled 6 3/8 to 26 1/4. 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 3/16 to 6 7/8 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 51/64 to 17 1/8, and Charles Schwab, up 1 to 37 5/16.
Among the brokers, Bear Stearns (BSC: news, msgs) extended Monday's gains, putting on 5 5/8, or 11.3 percent, to 55 3/8.
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 174 percent, or 34 25/32 to 54 25/32, 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 3/4 to 49 1/2, reaching a fresh 52-week low of 47 3/8 in intra-day dealings.
RedHat shares (RHAT: news, msgs) tumbled 2 7/8, or 12.1 percent, to 20 7/8 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.
See After Hours for post-market trading activity.
Treasury focus
Government prices were steady in another day of directionless trading.
The 10-year Treasury note was up 2/32 to yield 6.02 while the 30-year bond rose 6/32 to yield 5.80 percent. See Bond Report.
In the currency arena, the dollar gained 0.2 percent to 109.00 yen while euro/dollar climbed 0.5 percent to 0.9379. See latest currency rates.
In the commodity market, September crude lost 7 cents to $27.95 while the Bridge CRB index slipped 0.56 to 218.20.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
