<font color=blue>MARKET SNAPSHOT--Chip rally lifts Nasdaq
Intel, AMD on fire
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 1:53 PM ET Sep 19, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - The Nasdaq rallied Tuesday as buyers feasted on tech shares, with chip stocks enjoying the lion's share of the heated buying interest. A near 6-percent climb in shares of Intel limited losses in the Dow Industrials, which came at the hands of Alcoa following the company's profit warning.
"Not surprisingly, we're seeing a technical bounce back [from oversold levels] in the Nasdaq," commented Peter Coolidge, senior equity trader at Brean Murray.
Banc of America Securities upped Intel and Advanced Micro Devices to a "buy" from a "market perform," giving an additional boost to the semis, already on a rampage since the start of trading Tuesday. Just last Wednesday, Banc of America Securities downgraded Intel and AMD to a "market perform" from a "strong buy." The Philadelphia Semiconductor Index ($SOX: news, msgs) surged 6.3 percent.
The broader market witnessed gains in the financial arena, led by bank stocks. Biotech and drug stocks also edged higher while paper, retail, utility, oil and oil service retreated. Crude oil prices edged down on Tuesday after some more muscle-flexing on Monday. October crude fell 23 cents to $36.65.
The Dow Jones Industrials Average ($DJ: news, msgs) erased 2 points to 10,805, quickly giving up the mild gains posted immediately after the start of trading.
The Dow continues to be held down by profit concerns, with one of its old-economy components warning that it will miss Wall Street's earnings expectations after the close Monday.
In fact, Alcoa (AA: news, msgs) said third-quarter earnings will be in the range of 40 cents to 43 cents a share, less than the 49 cents per share expected by First Call. The company blamed softening in the transportation, building, construction and distribution markets as well as higher energy costs for the shortfall. The stock fell $2.62 below its NYSE close to $25.63 and was one of the Dow's biggest downside movers.
"We're in the pre-announcement minefield. The slowing economy is taking some casualties and they're adding up," Coolidge said. "There's more to take this market down than push it up."
"People are worried about earnings. And we've had some blowups," said John Zaro, managing member at Bourgeon Capital Management. "There are many real issues people are worried about," he said.
"It certainly doesn't look like the Fed has any reason to raise interest rates. So, at least [for now], that bogeyman isn't scaring the market. What has replaced it are concerns over rising oil prices," Zaro said. He believes the market will get a reprieve from higher oil prices over the next months.
Other Dow shares moving lower included Wal-Mart, Home Depot, Honeywell and International Paper while the index's frontrunners were Intel, Merck, SBC Communications and Philip Morris.
The Nasdaq Composite ($COMPQ: news, msgs) put on 85 points, or 2.3 percent, to 3,812 while the Nasdaq 100 Index ($NDX: news, msgs) rallied 122 points, or 3.4 percent, to 3,707.
The Standard & Poor's 500 Index ($SPX: news, msgs) rose 0.7 percent while the Russell 2000 Index ($RUT: news, msgs) of small-capitalization stocks edged down 0.1 percent.
Separately, volume stood at 651 million on the NYSE and at 1.02 billion on the Nasdaq Stock Market. Market breadth was mixed, losers beating winners by 15 to 12 on the NYSE and advancers matching decliners on the Nasdaq.
Listen to midday market review.
Earnings news
Goldman Sachs (GS: news, msgs) posted third-quarter earnings of $1.62 a share, well ahead of the First Call estimate of $1.51 a share. The stock was up 6 cents to $118.63. See full story.
Another company in the financial arena reporting Tuesday included A.G. Edwards, which earned 93 cents in its second quarter, beating the First Call estimate of 90 cents a share. The company made 86 cents in the year-ago quarter. The stock (AGE: news, msgs) rose 56 cents to $52.
Financial stocks were a modestly higher, with the S&P Bank Index ($BIX: news, msgs) up 1.7 percent and the Amex Securities Broker/Dealer Index ($XBD: news, msgs) rising 1.7 percent.
In other earnings news, FedEx (FDX: news, msgs) reported first-quarter earnings of 58 cents a share, surpassing the First Call estimate of 54 cents a share. The company made 52 cents in the year-ago period. Shares shed 33 cents to $38.28.
Sector movers
The SOX Index was on fire Tuesday. The semis -- which investors look to for leadership within technology -- have been on shaky ground in recent weeks. In fact, the semiconductor index lost 14 percent of its value in September following a percent 16 climb in August.
Among the big winners, Advanced Micro Devices (AMD: news, msgs) shot up 8 percent, or $2.13 to $28.63, Intel (INTC: news, msgs) climbed $3 to $58.81 and Micron Technology (MU: news, msgs) jumped 7 ercent, or $4.19 to $62.69.
Chip equipment makers were also heading north with a vengeance, with Applied Materials (AMAT: news, msgs) up $2.44 to $74.69 and Novellus (NVLS: news, msgs) up 5 percent, or $2.75 to $59.25.
Internet shares managed decent gains, with the Goldman Sachs Internet Index ($GIN: news, msgs) up 2.1 percent and Merrill Lynch's Internet Holdrs (HHH: news, msgs) up 0.1 percent. The biggest gainers in the group included CMGI (CMGI: news, msgs), up $1.19 to $36.50, Exodis Communications (EXDS: news, msgs), up $2 to $61.25. But Amazon.com (AMZN: news, msgs) bucked the upward trend, losing 5 percent, or $2.13 to $40.69. Barnesandnoble.com will replace Amazon as the premier bookseller on Yahoo's Web sites. Barnesandnoble.com (BNBN: news, msgs) skyrocketed 31 percent to $6.
Among the losers in the tech group, Sun Microsystems (SUNW: news, msgs) slipped The company announced Tuesday that it's acquiring Cobalt Networks in a stock deal valued at about $2 billion. Cobalt Networks (COBT: news, msgs), which specializes in Linux-based server gear, surged 34 percent to $55.13 while Sun sipped $1.56 to $113.69. See Silicon Stocks.
Treasury focus
Government prices were mixed, with long issues in a modest advance while short-dated securities struggled.
The 10-year Treasury added 3/32 to yield ($TNX: news, msgs) 5.86 percent and the 30-year Treasury bond gained 9/32 to yield ($TYX: news, msgs) 5.93 percent. See Bond Report.
On the economic front, August housing starts edged up 0.3 percent to a 1.531 million rate, less than the 1.55 million rate expected from economists surveyed by CBS MarketWatch.com. Building permits fell 2.8 percent to a 1.468 million rate. See full story and view Economic Preview, economic calendar and forecasts and historical economic data.
In the currency arena, dollar/yen (C_JPY: news, msgs) edged up 0.1 percent to 106.88 while euro/dollar (C_EUR: news, msgs) slipped 0.7 percent to 0.8489.
The euro reached a fresh all-time low against the dollar in intra-day dealings on Tuesday, falling to 0.8479. Multinationals, including Gillette (G: news, msgs) on Monday, cited the sagging euro as reason for a profit shortfall in its third quarter.
"The strength in the dollar adds to the list of forces creating a drag on U.S. corporate profitability," noted Bridgewater Associates.
"In the near future, corporations will be faced with paying the tab caused by today's heavy capital investment, which is being financed through debt. Add to that the surge in oil prices -- which is having the impact of squeezing profit margins. With these drags in place, it seems unlikely that U.S. corporations will be able to meet up to the lofty earnings growth that the marketplace is expecting," Bridgewater said.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
