<FONT COLOR=BLUE>MARKET SNAPSHOT--4:14 PM--Impressive turnaround for techs
Chips, Nets and cyclicals on a roll
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 4:14 PM ET Oct 4, 2000
NEW YORK (CBS.MW) - A nifty rally in chip and Internet stocks pushed the Nasdaq out of its doldrums Wednesday, helping the index interrupt its three-day losing streak and score respectable gains.
The Dow Industrials gained ground for the third session in a row, buoyed by another round of heady advances in cyclical issues, a long-forgotten area of the marketplace.
"We continue to see a number of cross-currents in this market," said James Herrick, managing director of equity trading at Robert Baird & Co. Investors have high expectations built into the companies that haven't issued a negative pre-announcement, he added.
In the tech sector, Internet shares rebounded from the bruising sell-off suffered on Tuesday, which saw business-to-business stocks get hammered.
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 45 cents to $31.62. Late Tuesday, the American Petroleum Institute said crude oil supplies rose by a larger-than-expected 3.4 million barrels in the week ended Sept. 29.
The Dow Jones Industrials Average ($DJ) rose 64 points, or 0.6 percent, to 10,784.
The cyclicals are attracting some value hunters, observed Clark Yingst, market strategist at Prudential Securities.
"Valuations on techs are arguably still high, even these stocks are down from their perch," he added.
Investors are holding out for the upcoming earnings reports, Yingst continued, hoping they'll jump start downtrodden areas of the market.
Keeping the Dow sharply positive were the cyclicals, with gains in shares of DuPont, Boeing, Alcoa, International Paper and Home Depot. But some of the blue-chip barometer's tech components reaped significant gains as well, with Hewlett-Packard, Intel and IBM among the leaders. The Dow's financial components struggled, with Ctitigroup, off 3.7 percent to $54.75, leading on the downside.
The Nasdaq Composite ($COMPQ) gained 67 points, or 1.9 percent, to 3,523 while the Nasdaq 100 Index ($NDX) rallied 100 points, or 3.0 percent, to 3,453.
The Standard & Poor's 500 Index ($SPX) rose 0.5 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks shed 0.2 percent.
Volume was heavy at 1.17 billion on the NYSE and at 2.08 billion on the Nasdaq Stock Market. Market breadth remained negative, even as the averaged advanced, with losers beating winners by 21 to 19 on the Nasdaq and by 16 to 12 on the NYSE.
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.
The Goldman Sachs Computer Software Index ($GSO) rose a respectable 3.2 percent, giving up earlier losses. Among stocks moving higher within the group, Computer Associates (CA) managed a 14.3-percent gain to $27.94 despite warning late Tuesday that second-quarter earnings will come in between 50 to 54 cents a share, missing the First Call estimate of 56 cents a share.
Meanwhile, Oracle (ORCL) saw the lion's share of its losses evaporate, losing only 88 cents to $68.63 after falling as much as 13 percent at its nadir Wednesday. The company reaffirmed its strong outlook for sales and earnings for the current quarter and full fiscal year, looking to dispel market speculation that it would not meet estimates. The stock has fallen over 15 percent during the past week. Robertson Stephens lowered its rating on the stock to a "long-term attractive" from a "buy" based on current valuation levels and near-term product transition risks in software applications.
Computer hardware stocks were the last to recover in the tech group Wednesday but buyers finally emerged late in session to take the group higher and the Goldman Sachs Hardware Index ($GHA) climbed 1.1 percent. IBM (IBM), one of the biggest losers early in the day, rebounded 3 percent to $114 following 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 Merrill raised fourth-quarter estimates on Big Blue to $1.50 from $1.49. Apple Computer (AAPL), up $1.19 to $23.50, managed an upswing after three days of deep declines that saw the stock drop 58 percent.
Internet stocks staged an amazing rebound, with the Goldman Sachs Internet Index ($GIN) up 4.3 percent. In the business-to-business arena, Merrill's B2B (BHH) Holdrs 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 $8 to $66.88 following an 18.9 percent plunge on Tuesday on the heels of a downgrade. One loser was SciQuest (SQST) said third-quarter losses will be worse than anticipated at 43 to 45 cents a share versus the First Call estimate of a loss of 37 cents a share. The stock is a component of
Biotech shares faltered, taking the Nasdaq Biotech Index ($IXBT) down 1.7 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.
Financials were among the losers Wednesday, with losses evenly spread between the brokerage and bank sectors. Weighing on sentiment was Knight Trading Group (NITE), which dropped $5.50, or 17 percent, to $26.69 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.
In merger news, Firstar Corp. (FSR) said it's purchasing US Bancorp (USB) in an agreement valued at $21.2 billion. US Bancorp added 19 cents to $23.38 while Firstar slipped $3.25 to $19. Both stocks are components of Merrill's Regional Bank Holdrs (RKH), which fell 0.2 percent.
Treasury action
In the Treasury arena, prices traded mixed in the aftermath of the Fed's policy-setting meeting Tuesday.
The Fed's inclusion of oil prices - in addition to the taut labor market - on its list of worries in the statement following the FOMC meeting Tuesday produced some profit-taking in the front end of the yield curve. The latter is the most sensitive area of the curve to changes -- or perceived changes -- in the fed funds rate target.
The 30-year was the beneficiary of whatever buying took place in the government arena, also aided by lower crude prices. The 10-year Treasury note erased 6/32 to yield ($TNX) 5.89 percent while the 30-year bond gained 1/32 to yield ($TYX) 5.94 percent.
In economic news, Wednesday saw the release of August factory orders, which rose 2 percent compared to the expected 1.7 percent increase. 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 0.3 percent to 0.8734. The European Central Bank will meet to decide on monetary policy Thursday, with market participants anticipating a small nudge up in rates.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
