<FONT COLOR=BLUE>MARKET SNAPSHOT--4:09 PM--Major averages take separate paths
Networkers, semis find buyers
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 4:09 PM ET Nov 3, 2000
NEW YORK (CBS.MW) - Technology buyers scooped up networking and chip issues, keeping the Nasdaq in modestly positive terrain throughout Friday's trading day, while Dow stocks sputtered under the weight of sloppy performances in many of its retail and cyclical shares.
In the meantime, investors processed the jobs report, which showed slower growth in non-farm payrolls but more pronounced wage pressures due to the taut labor markets. This proved slightly unnerving to bond markets and kept equity investors somewhat cautious.
"We are seeing [many] signs of a slowing economy but the unemployment rate isn't budging. The Fed won't take away its bias toward tightening at the next meeting in favor of a neutral stance on rates," said Bryan Piskorowski, market analyst at Prudential Securities.
"It's been a slow recovery for technology. We're confronted by uncertainty over how much the economy will slow, though the soft landing scenario is still the most likely outcome," Piskorowski added.
"We're hoping for a honeymoon-type rally after the elections. The seasonals are on our side and there's lots of liquidity and lots of cash parked in money market funds," Piskorowski added. "But there won't be a rampant recovery [with all the damage done]. We're still waiting for a green light."
Within Friday's market, consumer, biotech, retail, utility and drug issues slipped while financial shares traded mixed after a sloppy start. Inside the tech sector, hearty rallies in shares of Qualcomm, up 12.3 percent, and Rambus, up 28.3 percent, kept the Nasdaq modestly positive. Networking and fiber-optic issues were among the best performers and the Amex Networking Index ($NWX) put on 3.1 percent.
The Dow Jones Industrials Average ($DJ) gave up 62 points, or 0.6 percent, to 10,817 after falling as much as 124 points at its nadir. The biggest downside movers included Philip Morris, Home Depot, General Motors, Coca-Cola, Wal-Mart and United Technologies.
The Nasdaq Composite ($COMPQ) advanced 22 points, or 0.6 percent, to 3,451 in quiet action while the Nasdaq 100 Index rose 13 points, or 0.4 percent, to 3,321.
The damage inflicted on the market by the latest batch of profit warnings has been contained with limited follow-through selling. The recent price compression has begun to attract investors, according to Chris Wolfe, equity strategist at J.P. Morgan.
Wolfe believes a liquidity-driven rally will take place in November and December with so much cash sloshing around. "[But] the ride up will be bumpier and not as pronounced as last year," he conceded.
The Standard & Poor's 500 Index ($SPX) was off 0.1 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks edged down 0.1 percent.
Volume came in at 993 million on the NYSE and at 1.80 billion on the Nasdaq Stock Market. Market breadth was mixed, with decliners outpacing advancers by 14 to 13 on the NYSE while winners beat losers by 21 to 18 on the Nasdaq.
Separately, Trim Tabs said inflows into equities totaled $15.5 billion in the latest week versus inflows of $3.3 billion in the previous week. And funds investing primarily in U.S. stocks had inflows of $14.3 billion versus inflows of $3.2 billion in the previous week.
Inside the jobs data
Non-farm payrolls figures rose by a less-than-expected 137,000 in October versus the expected 183,000 gain. The unemployment rate remained steady at 3.9 percent versus the expected climb to 4 percent while average hourly earnings rose 0.4 percent, slightly higher than the 0.3 percent increase forecast by economists.
"While it does appear that job growth is indeed ebbing, labor supply remains incredibly tight. Clearly, the lack of workers is pushing up wages," said Joel Naroff, chief economist at Naroff Economic Advisors.
Naroff believes that'll be sufficient for the Fed to keep its inflation bias at the November Federal Open Market Committee meeting.
But Tony Crescenzi, chief bond market strategist at Miller Tabak & Co., said analysis based solely on average hourly earnings and the jobless rate are becoming increasingly faulty as it gives too little emphasis to the more forward-looking aspects of the employment report.
A more balanced analysis, Crescenzi said, suggests much greater deterioration in labor conditions than is apparent at first blush. He honed in on the average workweek, which declined in the latest month, and the softening in temporary and manufacturing jobs.
Specific movers
Qualcomm (QCOM) climbed $6.19 to $69. Late Thursday, the company said it made 25 cents a share in the fourth quarter, beating the First Call estimate by a penny. Revenue, at $635 million, was at the low end of expectations.
Sprint edged up 31 cents to $22.81 and Merrill's Telecom Holdrs (TTH) added 0.2 percent, giving up earlier gains. Sprint (FON) told investors that it sees 2000 earnings-per-share between $1.80 to $1.90 and between $1.65 and $1.75 in 2001. Currently, First Call pegs 2000 EPS at $1.90 and 2001 EPS at $2.10. Rival WorldCom (WCOM) rose 38 cents to $17.94 after falling for three straight sessions in the wake of its profit warning earlier in the week.
In the Internet arena, Priceline posted (PCLN) after the close Thursday a loss of a penny a share in the third quarter, matching the lowered First Call estimate. In addition, the troubled name-your-price outfit announced reshufflings on the executive level and slashed 16 percent of its workforce. The stock tumbled $2.25, or 33 percent, to $4.59 and Merrill's Internet Holdrs (HHH) slipped 1.8 percent after rising significantly over the past three sessions.
Semiconductor assembly equipment producer Kulicke & Soffa (KLIC), meanwhile, sank $3.88, or 26 percent, to $11 after lowering its revenue expectations for the first quarter of 2001 due to customer order deferrals. SG Cowen said Kulicke & Soffa's pre-announcement wasn't surprising and underscores recent concerns over declining fundamentals.
Some of the chip equipment stocks came under pressure, with Applied Materials (AMAT) down $2 to $50 and KLA Tencor (KLAC) off $1.81 to $31.69. But the Philly Semiconductor Index ($SOX) managed a 1.2 percent increase thanks to a 27-percent jump in shares of Rambus (RMBS) to $64.38. Morgan Stanley Dean Witter increased its 2001 earnings-per-share estimates for Rambus and reiterated its "strong buy" target.
Networking stocks fared well, with Cisco (CSCO) climbing 2 percent, or $1.13 to $56.88 ahead of its earnings report on Monday. Fiber-optic companies also put on a flashy show, pushing Merrill's Broadband Holdrs (BDH) up 4.3 percent. Qulacomm and Sycamore Networks, up 11 percent, or $6.75 to $68, took the lead.
Treasury focus
Government issues lost ground after the release of the employment report as investors zeroed in on the lower-than-expected unemployment report and higher-than-expected hourly earnings, which both pointed to continued tightness in the labor market. Moreover, the dollar's slump against the yen and the euro dampened sentiment.
The 10-year Treasury note fell 18/32 to yield ($TNX) 5.82 percent while the 30-year government bond erased 27/32 to yield ($TYX) 5.84 percent.
In other news, September factory orders climbed 1.6 percent, a lot more than the expected 0.9 percent increase. View Economic Preview, economic calendar and forecasts and historical economic data.
Cornering the foreign exchange market, dollar/yen fell 1.1 percent to 107.02 while euro/dollar rallied 0.9 percent to 0.8654 after climbing to an intra-day high of 0.8794, its highest level since early October. The European Central Bank intervened to support its fledgling currency early Friday, indicating that it remains concerned about the global and domestic repercussions of the exchange rate of the euro. See related story and |
