<FONT COLOR=BLUE>MARKET SNAPSHOT--1:04 PM--Dow plows ahead, Nasdaq recovers
Chips, cyclicals positive
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 1:04 PM ET Oct 4, 2000
NEW YORK (CBS.MW) - A rally in chip stocks managed to pull the Nasdaq out of its doldrums Wednesday, interrupting a three-day losing streak. Intel's 4.3 percent gain fueled the Dow Industrials' advance as well, as did another remarkable rise in cyclical issues.
The cyclicals are perhaps attracting value hunters, said Clark Yingst, market strategist at Prudential Securities. Valuations on tech stocks are arguably still high, he said, even if they're down from their perch.
Investors are holding out for the upcoming earnings reports, Yingst said, hoping that they'll jump start sagging areas of the market.
The broader market captured a bid in chemical, retail, paper and airline shares while utility, financial and biotech issues took a hit. Oil and oil service shares also weakened as November crude lost 60 cents to $31.47. Late Tuesday, the American Petroleum Institute said crude oil supplies rose by a larger-than-expected 3.4 million barrels in the week ended Sept. 29.
The Dow Jones Industrials Average ($DJ) climbed 100 points, or 0.9 percent, to 10,820.
Keeping the Dow solidly in positive terrain were shares of Intel, DuPont, SBC Communications, International Paper, Boeing and Walt-Mart. Moving lower were shares of Eastman Kodak, Citigroup, J.P. Morgan, Microsoft and Exxon Mobil.
The Nasdaq Composite ($COMPQ) gained 28 points, or 0.8 percent, to 3,483 while the Nasdaq 100 Index ($NDX) climbed 73 points, or 2.2 percent, to 3,426.
The Nasdaq has seen triple-digit losses during each of the past three trading sessions and shaved 8.5 percent of its value. The wanton liquidation of many Nasdaq stocks has taken its toll on big-name stocks, removing leadership from the market.
Amid the fear surrounding profit growth and valuations of tech companies, investors have set their sights on other areas of the market - the silver lining being that money is staying in the market instead of exiting into bond funds, for example.
The Standard & Poor's 500 Index ($SPX) rose 0.5 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks fell 0.6 percent.
Volume stood at 649 million on the NYSE and at 1.18 billion on the Nasdaq Stock Market. Breadth was sloppy, with losers pouncing on winners by 15 to 11 on the NYSE and by 23 to 14 on the Nasdaq.
Listen to midday market report.
More warnings
Profit warnings continued to pour in.
Knight Trading Group (NITE) dropped $5.06 to $27.13 after warning that third-quarter earnings will be lower-than-expected due to a difficult environment in late summer - punctuated by low volatility and Nasdaq declines - as well as expenses in building its international operations. Knight now sees earnings-per-share in the range of 13 to 16 cents versus the First Call estimate of 31 cents a share. Among Knight's competitors, Merrill Lynch (MER) fell $1.88 to $65.69 while Charles Schwab (SCH) shaved 94 cents to $32.63. The Amex Securities Broker/Dealer Index ($XBD) shed 1.8 percent.
Late Tuesday, Computer Associates (CA) warned that second-quarter earnings are expected to come in between 50 to 54 cents a share, missing the First Call estimate of 56 cents a share. The stock is a component of the Goldman Sachs Computer Software Index ($GSO), which rose 0.8 percent, giving up earlier losses. Computer Associates managed a 10-percent gain to $26.88 despite the warning. The stock, however, saw its value decline by 22 percent in September.
In the business-to-business arena, SciQuest (SQST) said third-quarter losses will be worse than anticipated at 43 to 45 cents a share versus the First Call estimate of a loss of 37 cents a share. The stock is a component of Merrill's B2B (BHH) Holdrs, which rallied 6.2 percent following an 11.2 percent plunge on Tuesday thanks to gains in shares of Commerce One, Ariba and FreeMarkets. Commerce One (CMRC) rose 5.0 percent to $61.81 Wednesday following an 18.9 percent plunge on Tuesday on the heels of a downgrade.
Sector movers
Chip stocks gained some ground following a three-day downdraft, led by advances in shares of Intel (INTC), up 4.5 percent to $42. The Philadelphia Semiconductor Index ($SOX) hoisted 5.1 percent.
Computer hardware stocks were having another rough day, taking the Goldman Sachs Hardware Index ($GHA) edged down 0.1 percent. IBM (IBM) fell another $1.38 to $109.19 after being stung by a 6.2 percent loss on Tuesday. Merrill Lynch tweaked third-quarter earnings-per-share estimates on IBM to $1.07 from $1.08 following the Computer Associates warning. But the brokerage raised fourth-quarter estimates on Big Blue to $1.50 from $1.49. Apple Computer (AAPL), up 31 cents to $22.63, managed an upswing after three days of deep declines that saw the stock drop 58 percent.
Software shares recovered and Computer Associates managed to shrug of its profit warning. But Oracle (ORCL) slumped $4.50 to $65. Robertson Stephens lowered its rating on the stock to a "long-term attractive" from a "buy" based on current valuation levels and near-term product transition risks in software applications. But Merrill said its views on Oracle haven't changed following the company's analyst meeting but said the stock's valuation will cap significant material upside moves in the near-term.
In merger news, Firstar Corp. (FSR) said it's purchasing US Bancorp (USB) in an agreement valued at $21.2 billion, creating the 8th largest bank holding company in the U.S. The deal is expected to close in the first quarter of 2001. US Bancorp added 19 cents to $23.38 while Firstar slipped $3.25 to $19. Both stocks are components of Merrill's Regional Bank Holdrs (RKH), which fell 0.7 percent.
Biotech shares faltered and the Nasdaq Biotech Index ($IXBT) fell 2.0 percent. Lehman Brothers upped Human Genome Sciences (HGSI) to an "outperform" rating from a "neutral" on positive momentum for the company and continued sector strength. The stock fell 3.4 percent to $158.50.
Treasury action
In the Treasury arena, prices traded mixed in the aftermath of the Fed's policy-setting meeting Tuesday.
The 10-year Treasury note erased 2/32 to yield ($TNX) 5.875 percent while the 30-year bond gained 6/32 to yield ($TYX) 5.93 percent.
In economic news, Wednesday will see the release of August factory orders, expected to rise by 1.7 percent. View Economic Preview, economic calendar and forecasts and historical economic data.
In currency markets, dollar/yen gained 0.5 percent to 109.30 while euro/dollar shed 0.4 percent to 0.8727. The European Central Bank will meet to decide on monetary policy Thursday, with market participants anticipating a small nudge up in rates. |
