<font color=blue>Market Snapshot--
Major averages struggle
Oil prices spike, sparking selling
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 11:51 AM ET Sep 20, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - Stocks faltered Wednesday as early buyers fled, scared by a spike in oil prices due to yet another unexpected fall in inventories. The steady stream of profit warnings also took its toll on the major averages.
October crude oil futures spiked 90 cents to $37.41 and reached an intraday peak of $37.80 after the American Petroleum Institute reported late Tuesday that crude oil inventories fell 2.035 million barrels in the week ended Sept. 15 -- about 3 million short of analysts' expectations. Read the full story. Oil and oil service shares bounced on the news - one of the few groups gaining ground in the broad market.
Higher energy costs have been cited as reason for profit shortfalls by a number of old-economy companies recently and has heavily weighed on investor psychology.
"We're seeing more of the same: pressure from oil prices and the falling euro," said Peter Boockvar, equity strategist at Miller, Tabak & Co. Third-quarter earnings may very well push the market out of its doldrums but, right now, people are discouraged, he added.
Inside the market, all tech sectors paused following Tuesday's gigantic leap. Not surprisingly, chip stocks suffered the heftiest decline and the Philadelphia Semiconductor Index ($SOX: news, msgs) shaved 2.6 percent following an 8.1-percent rally Tuesday.
The Dow Jones Industrials Average ($DJ: news, msgs) lost 37 points, or 0.3 percent, to 10,751.
The heaviest losses were seen in shares of Alcoa -- down 7.6 percent after tumbling Tuesday in the wake of a profit warning -- American Express, Coca-Cola, Philip Morris and Microsoft.
The Dow's frontrunners included Boeing, Exxon Mobil and Intel.
Being gained $2.25 to $59. The company (BA: news, msgs) said it expects higher cash flow -- more than $4 billion for full-year 2000 compared to previous estimates of $3 to $4 billion. See full story.
Meanwhile, United Technologies (UTX: news, msgs) said it will meet Wall Street's third-quarter and full-year consensus estimates despite the soft euro and a cooler-than-normal summer in many U.S. regions, which affected it Carrier unit. Moreover, the Dow-component said it sees earnings-per-share increasing by 15 percent in 2001. Shares were flat at $62.63.
The Nasdaq Composite ($COMPQ: news, msgs) shaved 40 points, or 1.0 percent, to 3,825 while the Nasdaq 100 Index ($NDX: news, msgs) eased 58 points, or 1.6 percent, to 3,698.
"Tuesday was a good bounce day for the Nasdaq but it was not enough of a positive day to say that the correcting trend of the past two weeks has been reversed," observed Robert Dickey, chief technical analyst at Dain Rauscher Wessels.
"The nearest resistance on the Nasdaq is at 4,000, and it would have to breach that level in order to rebuild the confidence. Otherwise, chalk Tuesday up as a bounce within a pullback, until a few more days can help to clear up the direction," Dickey said.
The Standard & Poor's 500 Index ($SPX: news, msgs) gave up 1.3 percent while the Russell 2000 Index ($RUT: news, msgs) of small-capitalization stocks shed 0.6 percent.
Separately, volume came in at 425 million on the NYSE and at 694 million on the Nasdaq Stock Market. Market breadth was sloppy, with losers outnumbering winners by 15 to 10 on the NYSE and by 22 to 13 on the Nasdaq.
Specific movers
In earnings news, Lehman Brothers (LEH: news, msgs) posted third-quarter earnings of $3.37 a share, handily surpassing the First Call estimate of $2.75 a share and the $2.20 earned in the year-ago quarter. The company also announced a 2-for-1 stock split. Shares rose $3.19 to $147.88 after rallying 7.3 percent on Tuesday.
Goldman Sachs (GS: news, msgs), off 56 cents to $119.38, erased earlier gains. The company enjoyed a rally thanks to better-than-projected quarterly results on Tuesday. The Amex Securities Broker/Dealer Index ($XBD: news, msgs) eased 0.4 percent while bank stocks came under some profit-taking and the S&P Bank Index ($BIX: news, msgs) shaved 2.3 percent.
Dean Foods (DF: news, msgs) also unleashed its quarterly results Wednesday, registering first-quarter earnings of 74 cents a share, a penny short of the First Call consensus estimate but ahead of the 70 cents earned in the year-ago period. Shares added 38 cents to $29.56.
On the merger front, ADC Telecommunications (ADCT: news, msgs) announced Wednesday it's snapping up privately-held Broadband Access Systems, a developer of cutting-edge Internet access technology, in a $2.25 billion stock deal. The transaction will lower fourth-quarter earnings by 2 cents and fiscal 2000 profit by 7 to 8 cents a share. See related story. ADC fell $3 to $31.88.
Treasury focus
Long-dated government issues slid after staging a respectable upward move on Tuesday.
The 10-year Treasury was off 3/32 to yield ($TNX: news, msgs) 5.865 percent and the 30-year Treasury bond erased 15/32 to yield ($TYX: news, msgs) 5.95 percent. See Bond Report.
On the economic front, Wednesday saw the release of the July trade numbers, which registered a record deficit of $31.9 billion versus the expected $31.3 billion. The U.S. posted a shortfall of $29.8 billion in June. The numbers had only a mildly negative effect on currency prices while fixed-income prices shrugged off the data. See full story. View Economic Preview, economic calendar and forecasts and historical economic data.
In the currency arena, the dollar sagged against the yen but gained more ground against the euro, which touched a new low of 0.8440. In recent dealings, dollar/yen (C_JPY: news, msgs) slipped 0.3 percent to 106.70 while euro/dollar (C_EUR: news, msgs) erased 0.7 percent to 0.8456.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
