<font color=BLUE>MARKET SNAPSHOT--Major averages tread water
Investors undecided
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 5:41 PM ET Aug 25, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - The major averages hugged the unchanged mark throughout most of the trading session Friday with no meaningful news to hang on for direction.
"There aren't a lot of telling signs emerging from the market," said Todd Gold, technical strategist at Gruntal & Co.
The market continues to look for leadership but isn't finding any.
"We continue to cautiously watch the semis. We're still skeptical of the [upward] move, which could be a bounce from oversold conditions. It's encouraging but it's still too soon to say this group has bottomed," Gold added.
Within technology, most sectors ended in the red, led by the semis. The Philadelphia Semiconductor index ($SOX: news, msgs) shed 1.7 percent Friday but has risen 15 percent this month.
The broad market saw a slip in oil service, utility and financial stocks while biotech, drug, paper and airline issues attracted buyers.
The Dow Jones Industrials Average ($DJ: news, msgs) gained 9.89 points, or 0.1 percent, to 11,192.63.
Recent action has been labeled as extremely encouraging by market pundits, though it has frustrated some participants as it lacks the kind of strength and momentum characteristic of stocks in the fourth quarter of 1999 and the first quarter of 2000.
"We're seeing a slow drift higher. Many people have been frustrated by the current lack of volatility," said Mike Sheldon, chief market strategist at Spencer Clarke.
"I don't think we'll see an explosive move higher but I'm encouraged by the recent action. Market breadth is improving and some industry groups that have been lagging are doing better," Sheldon added.
"The one thing that concerns me is the high level of complacency in the market," Sheldon said.
The Dow's leaders Friday included IBM, Wal-Mart, Eastman Kodak, Philip Morris and Boeing. Moving lower were shares of Coca-Cola, General Motors, Intel, International Paper and AT&T.
Coca-Cola (KO: news, msgs) was the blue-chip barometer's downside mover, shaving 3.6 percent, or 1 15/16 to 56. Salomon Smith Barney lowered its second-half volume estimates on Coca-Cola and cut its 2001 volume growth to 5 percent to 5.5 percent but maintained its $68 12-month price target.
The Nasdaq Composite ($COMPQ: news, msgs) lost 10.60 points, or 0.3 percent, to 4,042.68 while the Nasdaq 100 Index ($NDX: news, msgs) fell 18.32 points, or 0.5 percent, to 3,931.25.
Peter Cardillo, chief strategist at Westfalia Securities, believes the market is setting itself up for a breakout from its current trading range. The major averages have made steady progress -- with the Dow close to the 11,200 level and the Nasdaq holding above the 4,000 mark, he said.
"Next week we're likely to spend more time consolidating around these levels and get leadership as the new month begins. Right now we're not seeing leadership, just lots of focus on the news of individual stocks," Cardillo said.
But one market watcher isn't convinced the recent rally has enough stamina to keep going in the near-term.
"The recent rally has non-confirmations all over the place. That means it will be somewhat easier for the bears to reverse the market soon. Another thing bears have going for them is the unbelievable overconfidence bulls have at this time," said Tom Peterson, publisher of the newsletter Bull's Eye Research.
"Bears have a lot in their favor right now," he concluded.
The Standard & Poor's 500 Index ($SPX: news, msgs) inched down 0.1 percent while the Russell 2000 Index ($RUT: news, msgs) of small-capitalization stocks gained 0.3 percent.
Volume was light, coming in at 677 million on the NYSE and at 1.28 billion on the Nasdaq Stock Market. Breadth was narrowly positive, with advancers beating decliners by 14 to 13 on the NYSE and by 21 to 18 on the Nasdaq.
Separately, Trim Tabs reported that equities had inflows of $5.6 billion in the week ended Aug. 23 versus inflows of $600 million in the previous week. Equity funds investing primarily in U.S. stocks saw inflows of $5.6 billion vs. inflows of $1.1 billion in the previous week, Trim Tabs said.
Sector movers
Biotech shares blossomed for the fifth straight session, with the Nasdaq Biotech Index ($IXBT: news, msgs) up 2.2 percent. Merrill Lynch's Biotech Holdrs (BBH: news, msgs), a basket of 20 stocks, rose 3.3 percent. Among the biggest upside movers: DNA (DNA: news, msgs), up 10 3/8 to 190 1/4; Immunex (IMNX: news, msgs) added 15/16 to 47 5/8 and Amgen (AMGN: news, msgs) rose 2 to 74 5/8. Shares of companies with links to stem-cell research backpedaled after surging earlier in the week on news the federal government would fund research involving embryonic stem cells. StemCells (STEM: news, msgs), for example, fell 17.8 percent, or 1 23/32 to 7 15/16. See related story.
In earnings news, Sycamore Networks (SCMR: news, msgs) posted late Thursday fourth-quarter earnings of 8 cents a share, surpassing the First Call estimate by 2 cents. The maker of optical networking products generated revenue of $90.4 million compared to $59.2 million in the year-ago quarter. The stock slipped 7 3/16 to 150 13/16. It's part of Merrill Lynch's Internet Architecture Holdrs (IAH: news, msgs), which shed 0.7 percent.
Analysts praised Sycamore's results.
CS First Boston said in a research note that Sycamore will continue to emerge as a leading player in optical systems and that recent share appreciation could create immediate-term profit taking. It maintains a "buy" rating on the stock. Lehman Brothers reiterated its "buy" rating on the stock and $200 year-end price target, saying it believes the stock offers an attractive investment opportunity. Donaldson, Lufkin & Jenrette, meanwhile, raised its 12-month price target on the company to $180 and reiterated its "buy" rating, indicating that strong revenue momentum and a diversifying customer base makes them more optimistic about the company's future.
Shares of SDL slipped 9 3/4 to 402 1/8. Antitrust regulators asked JDS Uniphase (JDSU: news, msgs) and SDL (SDLI: news, msgs) to provide more information on their proposed $44 billion merger, which was announced on July 10 and is expected to be completed in the fourth quarter. Both companies said they intend to fully respond to the request by the Justice Department antitrust division. See full story. CS First Boston said in a research note that they continue to believe the merger will ultimately be approved by the DOJ given the increasing competition from start-ups. First Boston said a fourth-quarter completion date for the fourth quarter is reasonable. JDS added 3/16 to 125 5/16. Both stocks are components of Merrill's Broadband Holdrs (BDH: news, msgs), up 0.1 percent.
Another stock that dominated the news Friday was Emulex (EMLX: news, msgs), which ended down 7 5/16 at 105 3/4. The stock plummeted 60 percent to 45 before being halted Friday morning following the release of a fake press release, which stated that the networking-gear maker would slash its earnings estimates and that the company's Chief Executive Paul Folino would resign. The fake release claimed the Securities and Exchange Commission would investigate the company's accounting practices. The SEC declined to comment. Emulex issued a press release later in the session saying that the earlier press release was fictitious. Read the full story.
See After Hours for post-market trading activity.
Treasury and currency focus
Treasury prices traded in a mixed fashion throughout the session, with a downward bias in long-dated issues.
The 10-year Treasury note down 3/32 to yield ($TNX: news, msgs) 5.73 percent and the 30-year bond down 1/4 to yield ($TYX: news, msgs) 5.675 percent. See Bond Report.
On the economic front, second-quarter gross domestic product was upwardly revised to show a growth rate of 5.3 percent from the previously reported 5.2 percent. See full story and view Economic Preview, economic calendar and forecasts and historical economic data.
In other news, July existing home sales fell 9.8 percent to a 4.79 million rate, less than the expected 5.13 million rate. See full story.
Additionally, Alan Greenspan addressed the topic of global economic integration from a Fed conference in Jackson Hole, Wyoming Friday morning. The Fed chief did not directly address the markets in his speech. He said it's inevitable productivity will taper off but added that it's hard to find evidence that the productivity growth rate is slowing just yet. Read the full story.
The Fed cited rapid gains in productivity as the key factor behind its decision to leaves rates steady at this week's FOMC meeting. Productivity has been the linchpin behind the decade-long U.S. expansion and has been crucial in holding down wage inflation in the presence of a taut labor market.
In the currency arena, dollar/yen (C_JPY: news, msgs) added 0.2 percent to 107.16 while euro/dollar (C_EUR: news, msgs) edged up 0.2 percent to 0.9034.
Tokyo consumer prices slipped by a larger-than-expected 1.3 percent in August from the year-ago period -- the 12th straight month of declines. The numbers raise concerns over whether deflationary forces have truly dissipated from the Japanese economy. The Bank of Japan nudged up short-term rates in August on ground that deflation was no longer a threat.
Taichi Sakaiya, head of Japan's Economic Planning Agency, called the decline quite larger and that consumer prices need to be monitored.
"This report unambiguously contradicts the BOJ's assertion that deflation risks have passed. Based on these latest price figures, you should not expect any more rate hikes soon," said Carl Weinberg of High Frequency Economics.
In the commodity arena, October crude added 40 cents to $32.03 and the Bridge/CRB index tacked on 1.41 to 222.56. See full story.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
