MARKER SNAPSHOT--
Dow retreats; sleepy session for techs
Retailers, financials slide
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 3:26 PM ET Aug 15, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) -Blue-chip issues remained in the red Tuesday as investors lightened up on blue chips following three straight sessions of gains. Selling pressure in the retail and financial sectors was behind the weak tone the broad market while a rise in the chip arena kept the Nasdaq slightly positive.
"The market continues to trade back and forth. It's a tough environment," said Chris Wolfe, market strategist at J.P. Morgan.
The market believes we'll see the U.S. economy come to a soft landing, Wolfe said, and investors reward different groups with their continued rotation. The chip sector, for example, got too oversold, he said, and buyers are now slowly regaining their confidence in the group.
Within technology, semis plowed ahead following massive gains on Monday, capping the Nasdaq's losses. Computer software shares were the sole losers within technology as Internet and networking issues posted modest gains. The broader market saw the largest losses in the retail and financial sectors while utility, drug and oil stocks eked out minor gains.
The Dow Jones Industrials Average ($DJ: news, msgs) slipped 81 points, or 0.7 percent, 11,094.
"Market breadth remains negative," said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray.
The market, Belski said, is looking for a catalyst to bring buyers back into the tech sector. "Investors are still indecisive. They have levitated toward buying value stocks," he said.
"We're seeing a typical summer slowdown with light volumes," Belski said. He believes the market will get a fourth quarter rally but doesn't believe it will have the same kind of momentum witnessed last year.
Moving on the downside were shares of Home Depot -- which tumbled 8.5 percent -- Wal-Mart, Hewlett-Packard and Boeing. Among the gainers were shares of Procter & Gamble, Philip Morris, AT&T and Honeywell.
The Nasdaq Composite ($COMPQ: news, msgs) added 14 points, or 0.4 percent, to 3,864 while the Nasdaq 100 Index ($NDX: news, msgs) added 12 points, or 0.3 percent, to 3,731.
The Standard & Poor's 500 Index ($SPX: news, msgs) edged down 0.3 percent while the Russell 2000 Index ($RUT: news, msgs) of small-capitalization stocks erased 0.3 percent.
Volume came in at 743 million on the NYSE and at 1.12 billion on the Nasdaq Stock Market. Losers beat winners by 16 to 12 on the NYSE and by 21 to 19 on the Nasdaq.
Sector movers
Chip stocks put on a impressive performance for a third straight session, with the Philadelphia Semiconductor Index ($SOX: news, msgs) up 2.7 percent on the heels of a 7.7 percent climb on Monday.
Morgan Stanley issued a positive note on the semis Tuesday, saying it believes the semiconductor cycle is intact and has another 18 to 24 months to run.
"Demand remains solid and inventories in check. The seasonal uptick in PC demand is occurring now," Morgan Stanley said.
The brokerage said concerns over wireless demand are too negative and that the average stock appears to have discounted cooler growth, rendering them attractive at current levels. Some of the stocks mentioned by Morgan Stanley included Intel (INTC: news, msgs), up 3/16 to 67 1/8, LSI Logic (LSI: news, msgs), up 13/16 to 36 9/16, Micron Technology (MU: news, msgs), up 3 to 83 1/2, Rambus (RMBS: news, msgs), up 4 7/16 to 81 3/8 and National Semiconductor (NSM: news, msgs), up 1 9/16 to39 9/16.
Morgan Stanley also said its believes chip equipment stocks bottomed over the near term, with worries over stocks like Teradyne (TER: news, msgs) and Kulicke & Soffa Industries (KLIC: news, msgs) overblown. The latter shed 0.4 percent while the former added 0.3 percent. See Silicon Stocks.
In company news, Motorola Computer Group and Red Hat (RHAT: news, msgs) announced Tuesday that they've joined forces to make the Linux operating system ready for telecom applications designed to run 24 hours a day. Red Hat added 1 15/16 to 23 3/4 while Motorola (MOT: news, msgs), which is part of the $SOX index, added 3/16 to 35 15/16, erasing earlier losses. See full story.
Computer hardware stocks were a sliver higher, with the Goldman Sachs Hardware Index ($GHA: news, msgs) up 0.2 percent, giving up earlier losses. Dell Computer rose after sliding for three straight sessions following last week's earnings report. The stock (DELL: news, msgs) added 1 3/4 to 38 7/16. But Hewlett-Packard (HWP: news, msgs) was among the Dow's downside movers, falling 3 5/8 to 110 7/8.
In merger news, Canada's Nortel Networks (NT: news, msgs) announced it will purchase Sonoma Systems, a firm that delivers high-speed video, data and voice over a single connection, in a $540 million stock deal. The deal is expected to close in the fourth quarter of 2000 and will result in the issuance of about 6.9 million in Nortel common shares. The company said the acquisition is projected to be neutral to earnings in 2000 and slightly accretive to earnings from operations in 2001. Nortel shares shed 3/16 to 79 1/16 while Merrill Lynch's Broadband Holdrs (BDH: news, msgs), of which Nortel is a component, edged up 0.1 percent. Read the story.
In the meantime, another batch of retailers checked in with quarterly results on Tuesday. The retail sector weakened after leading the broader market higher on Monday. The S&P Retail Index ($RLX: news, msgs) fell 3.2 percent and was the broad market's downside mover among sectors.
Home Depot (HD: news, msgs) was the Dow's downside leader in the wake of its earnings report. The company posted a second-quarter profit of 36 cents a share, matching the First Call estimate. The company made 29 cents in the year-ago quarter. Banc of America Securities downgraded the stock to a "buy" from a "strong buy" rating and slightly lowered its earnings estimates for 2000 and 2001. Home Depot fell 3 7/16 to 55 9/16 after rising 3 1/16 on Monday.
J.C. Penney (JCP: news, msgs) registered a second-quarter profit from operations of a penny a share versus the First Call estimate of a breakeven quarter. Looking forward, the retailer said it believes third-and fourth-quarter earnings per share could be adversely affected if the ongoing slowdown in the department store sector continues and leads to a "more promotional" second half, unleashing worries in the retail group that a cooler economy will hurt profits. The stock fell 1 1/4 to 16 11/16.
Staples (SPLS: news, msgs) posted a second-quarter profit of 10 cents a share, meeting the First Call estimate. The company made 11 cents in the same period last year. Staples slipped 9/16 to 17 9/16. See full story.
Target (TGT: news, msgs) registered second-quarter earnings of 28 cents a share, in line with the First Call estimate and ahead of the 24 cents a share earned in the same quarter last year. Shares lost 9/16 to 29 3/8. See full story.
Williams-Sonoma (WSM: news, msgs) posted second-quarter earnings of 9 cents a share, beating the First Call estimate by a penny. The retailer fell 5/16 to 39 3/4.
And BJ's Wholesale Club (BJ: news, msgs) checked in with a second-quarter profit of 42 cents a share, surpassing the First Call estimate by 2 cents and ahead of last year's earnings-per-share of 34 cents. The stock eked out a loss of 3/16 to 35 1/16.
Brokerage stocks came under some selling pressure after posting healthy gains over the past weeks. The Amex Securities Broker/Dealer Index ($XBD: news, msgs) erased 2.1 after reaching a record high on Monday.
Still, Merrill Lynch had positive comments on some of the major brokerages, raising its third-quarter and fiscal 2000 and 2001 earnings-per-share estimates on Goldman Sachs (GS: news, msgs), Lehman Brothers (LEH: news, msgs) and Morgan Stanley Dean Witter (MWD: news, msgs). Lehman fell 6 3/16 to 131 3/16, Goldman lost 2 7/16 to 118 5/16 and Morgan Stanley slipped 2 3/4 to 101 5/16.
Over in the bank sector, the S&P Bank Index ($BIX: news, msgs) declined 0.8 percent. Morgan Stanley Dean Witter issued a cautionary note on bank stocks indicating that valuations for the sector are not attractive.
Oil shares rose but came well off session highs as crude oil prices retreated after rallying earlier in the day. The CBOE Oil Index ($OIX: news, msgs) added 0.4 percent while the Philadelphia Oil Service Index ($OSX: news, msgs) lost 1.2 percent, relinquishing earlier gains. Among the winners in the oil service group: Schlumberger (SLB: news, msgs), up 1/4 to 82 1/4, and Baker Hughes (BHI: news, msgs), up 1/16 to 38 1/4. In the oil sector, Dow-component Exxon Mobil (XOM: news, msgs) edged up 1/8 to 82 11/16. Market watchers are keeping a close eye on oil prices Tuesday ahead of supply data due out after the close from the American Petroleum Institute. September crude shed 29 cents to $31.65 after reaching an intra-day high of $32.65 and piercing the $32.00 mark on Monday. In London, September Brent pierced 10-year highs Tuesday. See related story.
Shares of Deere Co. (DE: news, msgs) slid 9.6 percent, or 3 9/16 to 33 7/16 following its earnings report. The company checked in with third-quarter earnings of 72 cents a share, handily beating the First Call estimate of 59 cents a share. But investors zeroed in on the company's forward-looking statements. Deere said its fourth-quarter profit will be negatively affected by normal seasonal factors and by an increase in promotional programs. In addition, weakness in the fundamentals of the farm economy is likely to continue next year, with industry-retail sales of farm machinery in the U.S. and Canada forecast to be flat to down 5 percent.
Treasury focus
Bond prices extended earlier losses, with long-dated issues struggling.
The 10-year Treasury note shed 6/32 to yield ($TNX: news, msgs) 5.80 percent and the 30-year bond lost 9/32 to yield ($TYX: news, msgs) 5.71 percent. See Bond Report.
Tuesday's economic docket saw the release of July industrial production, which rose by an as-expected 0.4 percent. Capacity utilization, meanwhile, stood at 82.3 percent compared to June's 82.2 percent. The market barely batted an eye at the data. See full story.
Wednesday will see the release of the July consumer price index, which is expected to rise by 0.2 percent both overall and at the core. Also due out are July housing starts, which are seen coming in at 1.55 million. View Economic Preview, economic calendar and forecasts and historical economic data.
In the currency arena, the dollar weakened. In recent action, dollar/yen (C_JPY: news, msgs) fell 0.3 percent to 109.06 while euro/dollar (C_EUR: news, msgs) rose 0.8 percent to 0.9130. See latest currency rates.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
