<FONT COLOR=BLUE>MARKET SNAPSHOT--Sloppy action for shares
Nets tank; earnings fears envelop market
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 3:37 PM ET Sep 27, 2000
NEW YORK (CBS.MW) - Earnings fears kept the bulls at bay Wednesday and the major averages slumped in a session characterized by seesaw action. In fact, the Dow Industrials and Nasdaq climbed in and out of negative territory as investors tried to sort out their worries.
Exacerbating the negative action in many widely-held stocks was quarter-end positioning on the part of fund managers. This accelerates whatever trend is in place in place for individual stocks, said Barry Hyman, chief investment strategist at Weatherly Securities.
"Mutual funds are moving money around in a major way," said Scott Bleier, chief investment strategist at Prime Charter. "They're selling their losers and trying to add to their winners, producing all this vicious sector rotation. Through all this, however, the averages have remained locked in a range."
"The market is very much in a sell-the-rumor and buy-the-fact mode. It's building in lowered earnings expectations," Bleier said.
"The market made repeated attempts [to stay positive] but they didn't succeed. [The averages] have a lot to deal with both from a seasonal standpoint and an earnings standpoint," said Barry Hyman, chief investment strategist at Weatherly Securities.
Inside technology, early gains in chip stocks vanished, removing the force that sustained the group throughout the day. And a plunge in Net stocks added to the negative sentiment surrounding tech stocks. Among high-profile names reaching fresh 52-week lows Wednesday were Dell Computer, off 5.6 percent to $31.75, Motorola, down 5.4 percent to $28.44 and Lucent Technologies, off 6.4 percent to $28.50.
In the broad market, retail and biotech shares clawed their way into the positive column while utility stocks got a boost from investors looking for safety.
In the meantime, oil shares also gained ground as crude prices rose after four straight days of declines. November crude added 10 cents to $31.60. The American Petroleum Institute reported late Tuesday that crude supplies for the week ended Sept. 22 dropped 2.2 million barrels versus expectations for a rise.
The Dow Jones Industrials Average ($DJ) gave up 38 points, or 0.4 percent, to 10,593.
Five Dow stocks breached new 52-week lows Wednesday: AT&T, Alcoa, Caterpillar, International Paper and Eastman Kodak.
Jeopardizing the Dow Industrials' repeated attempts to rally was a continued plunge in shares of Eastman Kodak in the wake of its profit warning Tuesday. Kodak dropped 9.8 percent to $40.13 and was the index's downside leaders.
Also leading on the downside were shares of Eastman Kodak, Caterpillar, AT&T, Honeywell and Microsoft. Witnessing upside action were shares of Exxon Mobil, United Technologies, Philip Morris, Hewlett-Packard and Merck.
Meanwhile, Coca-Cola (KO) gained 63 cents to $55.56 after announcing that third-quarter unit-case volume would increase about 4 percent worldwide, reassuring analysts that the beverage giant would match earnings forecasts for the period. The stock has already risen 4 percent during the first two trading days of the week.
The Nasdaq Composite ($COMPQ) slumped 47 points, or 1.3 percent, to 3,641 while the Nasdaq 100 Index ($NDX) put on 23 points, or 0.6 percent, to 3,559.
"The broader negative news on the economy and currencies are taking their toll on stocks, and this weakness will likely continue until the third quarter earnings reports start to provide a better showing in mid-October. Until then, dodging the land mines will be the biggest challenge for investors," said Robert Dickey, chief technical strategist at Dain Rauscher Wessels.
The Standard & Poor's 500 Index ($SPX) edged down 0.3 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks erased 0.2 percent.
Separately, volume stood at 996 million on the NYSE and at 1.64 billion on the Nasdaq Stock Market. Breadth was sloppy, with losers beat winners by 15 to 13 on the NYSE and by 20 to 17 on the Nasdaq.
Sector movers
Internet stocks took a drubbing for a third straight session. The Goldman Sachs Internet Index ($GIN) fell 5.8 percent while Merrill Lynch's Internet Index (HHH) tumbled 8.4 percent.
Pacing the decline were shares of Priceline.com (PCLN), which revealed that third-quarter revenue would come in below expectations. The company estimates revenue to come in at $360 to $380 million versus revenue of $152.2 million in the year-ago quarter. The company cited a shortfall in revenue from the sale of airline tickets, which is expected to be $20 to $25 million less than levels registered during the second quarter of 2000. First Call expects a one-cent loss for the quarter. Shares fell for the third straight session, plunging $8.27, or 44 percent, to $10.38.
Many Net stalwarts took a hit, including Yahoo (YHOO), off 7 percent to $95.31, and EBay (EBAY), down 5.6 percent to $66.75.
Chip stocks, which initially kept the Nasdaq positive, succumbed to a wave of selling late in the day as the Philadelphia Semiconductor Index ($SOX) fumbled 1.3 percent, its fifth straight session of losses, led by Advanced Micro Devices (AMD), off 5.5 percent to $23.50.
Bucking the trend were shares of Intel (INTC), up 50 cents to $43.81, Micron Technology (MU), up 2.0 percent to $50.63, Altera (ALTR) gained 2.7 percent to $49.13 while KLA-Tencor (KLAC) tacked on 3.3 percent to $41.19.
Silicon Storage (SSTI) released a positive pre-announcement, saying its sees third-quarter earnings-per-share above 35 cents versus the first call estimate of 28 cents a share. The company said demand continues to outstrip supply, with the situation expected to continue well into 2001. The stock rose $2.30, or nearly 10 percent, to $28.38.
Shares of 3Com (COMS) swelled $3.25, or 23 percent, to $17.19. Late Tuesday, the company reported a loss from operations of 12 cents a share in its first quarter, cruising past analyst's estimates of a loss of 33 cents a share.
Treasury focus
Treasury prices struggled as inflation concerns dampened enthusiasm. The market is also processing supply in the corporate sector.
The 10-year bond lost 7/32 to yield ($TNX) 5.835 percent while the 30-year Treasury bond slipped 1/8 to yield ($TYX) 5.89 percent.
The Bureau of Labor Statistics confirmed a Washington Post article indicating an upward revision to the consumer price index due to calculating glitches. The government agency said consumer prices between Dec. 1999 and Aug. 2000 were running at a 2.7 percent increase -- not the 2.6-percent increase initially reported.
Commenting on the news, Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the upward revisions put the rate on a clear upward trend. While the revision is not be high enough to prompt the Fed into a near-term rate hike, Shepherdson said it makes him even more certain that a cut in rates isn't in the cards anytime soon.
In economic news, Wednesday saw the release of August durable goods orders, which gained 2.9 percent compared to expectations for a 2.4 percent increase. Excluding transportation, orders added 1.9 percent. View Economic Preview, economic calendar and forecasts and historical economic data.
Separately, the Treasury announced it would buy back $1.0 billion in 30-year issues Thursday with maturities ranging from Feb. 2010 to Nov. 2014.
In the currency market, the euro slipped 0.1 percent to 0.8819 while dollar/yen lost 0.1 percent to 107.41. |
