MARKET SNAPSHOT
Dow struggles; Nasdaq off highs
CPI benign, up 0.2%
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 2:21 PM ET Aug 16, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - The Nasdaq erased most of its earlier gains as some profit-takers emerged in afternoon trading Wednesday. Chip stocks remained the market's bright spot following a stellar earnings report from Analog Devices and tech buyers were reassured by another batch of benign inflation news.
Blue chips remained in a slump as another sell-off in retail stocks weighed on the broad market. Financial issues also failed to capture buying interest, even as market participants had a couple of positive economic reports to chew on. Oil service, utility and drug stocks eked out gains while biotech issues slipped.
"The Dow has gotten sandbagged by Home Depot for a second session. And financial stocks continue to tread water," said Donald Selkin, chief market strategist at Joseph Gunnar.
"Perceptions change rapidly in this market and we get continued, vigorous rotation," Selkin added. "There's still uncertainty over profit growth later in the year."
What's encouraging is the rally in shares of BEA Systems and Analog Devices following their smashing earnings results as it proves the market is able to respond positively to good news, Selkin said.
The Dow Jones Industrials Average ($DJ: news, msgs) erased 60 points, or 0.5 percent, 11,006.
"This uptrend in the market will continue to be choppy, with much less momentum than we experienced last fall. Concerns about third- quarter earnings, caused by higher interest rates and oil prices, will take much of the steam out of the move to make this rally much more sloppy than what investors would like," observed Robert Dickey, chief technical analyst at Dain Rauscher Wessels.
The biggest downside mover was Home Depot - off 6.3 percent. Also losing ground: Wal-Mart, Walt Disney, American Express and Coca-Cola. Among the winners: AT&T, General Motors, Johnson & Johnson and Philip Morris.
The Nasdaq Composite ($COMPQ: news, msgs) inched up 4 points, or 0.1 percent, to 3,856 while the Nasdaq 100 Index ($NDX: news, msgs) shed 4 points, or 0.1 percent, to 3,718.
The Standard & Poor's 500 Index ($SPX: news, msgs) edged down 0.2 percent while the Russell 2000 Index ($RUT: news, msgs) of small-capitalization stocks gained 0.3 percent.
Volume checked in at 656 million on the NYSE and at 1.00 billion on the Nasdaq Stock Market. Winners bested losers by 15 to 13 on the NYSE and by 19 to 18 on the Nasdaq.
Inside the data
The July consumer price index rose 0.2 percent both overall and at the core, which excludes the extremely jumpy food and energy components. The numbers matched estimates of a survey of economists conducted by CBS MarketWatch.com. The closely-watched core CPI rate has been very well-behaved, having risen only 0.2 percent for four straight months.
The CPI is the last key indicator released ahead of the Fed's policy-setting meeting next week. While the morning's benign data only reinforces the view that the Fed can stay sidelined on Aug. 22, the market had made up its mind that the central bank could afford to take a wait-and-see stance following the second-quarter productivity data and July employment report. See full story.
"Inflation remains well-behaved overall," said Dan Seto, senior economist at Sumitomo Life Investment Co.
While there's some indication of problems in little isolated pockets, Seto said the inflation picture remains a rosy one and that the U.S. economy is moving in the right direction.
Seto said the Fed appears inclined to take a wait-and-see approach on interest rates. What will be key for the central bank going forward , he said, is how the consumer behaves.
"The Fed is targeting demand, not supply," Seto observed.
In other news, July housing starts fell 3.3 percent to a 1.512 million rate, lower than the expected 1.55 million. And building permits slipped by 2 percent to 1.497 million. View Economic Preview, economic calendar and forecasts and historical economic data.
Sector movers
An impressive earnings report from Analog Devices (ADI: news, msgs) after the close Tuesday gave the semis another nice boost on Wednesday. The Philadelphia Semiconductor Index ($SOX: news, msgs) added 2.6 percent, extending its winning streak to four straight sessions.
Analog Devices, which is not a component of the $SOX index, posted a third-quarter profit from operations of 43 cents, easily beating the First Call estimate of 37 cents share. Quarterly sales surged 85 percent from the year-ago period. See full story. Shares surged 15 7/16 above their NYSE close to 92 1/4.
BEA Systems (BEAS: news, msgs) rose 7 1/4 to 56 1/8 and boosted Merrill Lynch's Internet Infrastructure Holdrs (IIH: news, msgs), which climbed 1.1 percent. The company registered after the close Tuesday a second-quarter profit from operations of 5 cents a share, a penny ahead of the First Call estimate. The company made 2 cents in the year-ago period.
Kana Communications (KANA: news, msgs) also boosted the Holdrs with its 16 percent jump, or 5 3/16 to 37 11/16. The company announced it has entered into a strategic alliance with IBM to manage online transactions and relationships among customers and business partners. IBM (IBM: news, msgs) shed 2 1/16 to 119 15/16.
In the Internet arena, portal Lycos (LCOS: news, msgs) registered late Tuesday a fourth-quarter profit of 12 cents a share, beating the First Call estimate by 4 cents. Shares added 4 3/8 to 62 5/16. The stock is a component of Merrill's Internet Holdrs (HHH: news, msgs), which climbed 1.6 percent.
Meanwhile, another string of retail firms unveiled their results and investors unloaded shares of retailers for a second straight session. The S&P Retail Index ($RLX: news, msgs) lost 3.0 percent.
Home Depot (HD: news, msgs), which fell 9.3 percent on Tuesday, lost an additional 2 7/16 to 51 1/16 on Wednesday. The Dow-component received a downgrade from Donaldson, Lufkin & Jenrette to a "buy" from a "top pick." Salomon Smith Barney cut its rating on the stock to an "outperform" from a "buy." On Tuesday, the company saw its rating slashed by Banc of America Securities.
DLJ also lowered its ratings on Wal-Mart (WMT: news, msgs), off 1 7/8 to 49 11/16, and Costco (COST: news, msgs), down 1 13/16 to 32 15/16.
Turning to the earnings news, Tiffany posted a second-quarter profit of 26 cents a share, 4 cents ahead of the First Call consensus estimate. The company made 16 cents in the year-ago quarter. The stock (TIF: news, msgs) slipped 1 3/8 to 39. See full story.
Talbots registered a second-quarter profit of 46 cents a share, in line with the First Call estimate and well ahead of the 12 cents earned in the year-ago quarter. Shares (TLB: news, msgs) fell 1/16 to 61 1/2.
Saks posted late Tuesday a second-quarter loss of 3 cents a share, matching the downwardly revised First Call estimate. The company made 18 cents in the year-ago period. Looking ahead, Saks said it anticipates continued weakness in sales and gross margins in the department store group during the third quarter related to the apparel environment. The company said it expects the third quarter to be modestly profitable. The stock (SKS: news, msgs) slipped 1/16 to 9 3/8.
Intimate Brands (IBI: news, msgs) checked in after the close Tuesday with second-quarter earnings of 20 cents a share, matching the First Call estimate and 2 cents ahead of earnings-per-share in the year-ago quarter. The stock edged down 3/32 to 16 17/32.
And Kohl's checked in after the close Tuesday with second-quarter earnings of 19 cents a share, beating the First Call estimate by a penny and ahead of last year's earnings of 13 cents a share. Shares (KSS: news, msgs) fell 1 1/16 to 55 15/16.
The Saks warning of slower third-quarter earnings may put additional pressure on the retail sector Wednesday. On Tuesday, J.C. Penney (JCP: news, msgs) said third- and fourth-quarter earnings per share could be adversely affected if the ongoing slowdown in the department store sector continues.
Treasury focus
Government prices slipped, with no positive action following the release of the morning's batch of tame economic data.
In the meantime, Treasury announced that it will buy back $1.5 billion in long-dated bonds on Thursday.
The 10-year Treasury note slipped 1/8 to yield ($TNX: news, msgs) 5.82 percent and the 30-year bond slid 1/4 to yield ($TYX: news, msgs) 5.73 percent. See Bond Report.
In the currency market, the greenback continued to weaken against the yen, with dollar/yen (C_JPY: news, msgs) at 108.57, off 0.4 percent from the previous close. Euro/dollar (C_EUR: news, msgs), meanwhile, added 0.2 percent to 0.9147. See latest currency rates.
In the commodity arena, September crude shed 7 cents to $31.60 while the Bridge CRB index added 0.34 to 219.03. The American Petroleum Institute reported late Tuesday that crude supplies rose by a larger-than-expected 7.4 million barrels to total 286.4 million in the latest week. The 24-year record low for API crude stocks is about 282 million barrels. See related story.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
