<FONT COLOR=BLUE>MARKET SNAPSHOT--Stocks erase brief rally
Florida ballot ruling provides temporary boost
By William L. Watts & Greg Morcroft, CBS.MarketWatch.com
Last Update: 12:44 PM ET Nov 17, 2000
NEW YORK (CBS.MW) -- A Florida judge's ruling raised hopes that an end may soon be in sight for the contested presidential election, but the development gave stocks only a short-lived boost in volatile trading.
Major averages sank back into the red by midday. After gaining more than 100 points, the Dow Jones Industrial Average ($DJ) was off 68 points, or 0.6 percent, to 10,588. The tech-heavy Nasdaq Composite Index ($COMPQ) was off 43 points to 2,989.
The brief rally came after Leon County Circuit Judge Terry Lewis said Florida state officials don't have to accept hand-counted votes tallied since a Nov. 14 deadline.
Although the ruling could conceivably put an end to the White House race, Democrats are expected to appeal to the Florida Supreme Court. Also, numerous other legal proceedings surrounding the Florida ballots are still pending.
Knee-jerk reactions aside, analysts said the market action underscores ideas that election uncertainty hasn't been the main factor behind recent weakness in equity markets.
"The issue in the marketplace is earnings, and more specifically, the earnings disappointments we've had over the past ... several weeks, " said Clark Yingst, market strategist at Prudential Securities.
Coupled with indications the Federal Reserve is still eyeing upside inflation risks, a negative tone has proved hard to overcome, Yingst said.
Technology shares opened with a positive tone, attempting to bounce back from Thursday's 4.2 percent decline in the Nasdaq Composite Index, which sent Asian and European markets lower.
Scott Bleier, chief investment strategist at Prime Charter, said the Nasdaq was still suffering the impact of Merrill Lynch's decision Thursday to downgrade communications chips due to inventory concerns and the belief that the sector lacks a near-term positive catalyst.
"That is really what put a crimp in Nasdaq," Bleier said.
Analysts said there was no impetus to shake the negative tone Friday.
"The situation hasn't changed. There's no catalyst for an (upside move.) We have one good day followed by two-to-three down days. We can't seem to get out of that pattern," remarked Scott Curtis, senior equity trader at Kaufman Brothers.
Chip stocks remained on the defensive Friday. Telecommunications stocks were also moving to the downside. BellSouth (BLS) headed south after the company issued 2001 earnings growth estimates that were below analyst forecasts.
The stock was down $6.38, or 13 percent, to $42.88 at midday. Late Thursday, the telecommunications carrier said it expected 2001 profit from operations would climb by 7 to 9 percent over 2000 levels. Based on average EPS estimates compiled by First Call, analysts were expecting year-over-year growth of 13 percent, on average. Revenue for 2001 is expected to grow at a 9 to 11 percent annual clip.
Other phone companies and telecom equipment makers also declined. SBC Communications (SBC) was off $1.94 to $56.12. Nortel (NT) dropped $2.81, or 8.2 percent, to $31.56, posting another 52-week low.
Weakness overseas
Europe's markets were solidly red on Friday, led lower by a second day of weakness among blue-chip technology stocks like France's Alcatel (ALA) and Dutch semiconductor designer ASM Lithography (ASML).
Japan's Nikkei Average slid 0.29 percent, or 42.73 points, to end the week's session at 14,544.30 points. The broader TOPIX closed at 1,379.63 points, down 0.05 percent.
On Thursday, the Dow industrials fell 51.57 points, or 0.5 percent, to 10,656.03. The Nasdaq composite decayed 133.61 points, or 4.2 percent, to 3,031.88 while the Nasdaq 100 Index dropped 151.54 points, or 4.9 percent, to 2,925.16.
The Standard & Poor's 500 Index ($SPX) erased 1.3 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks gave up 2.1 percent.
Sunny outlook
Sun Microsystems was off $1.50 to $85.75.
Just before the close of trade Thursday, Sun Micro (SUNW) held its mid-second-quarter update. Chief Financial Officer Michael Lehman, said during the call that the guidance hasn't change for the hardware and software giant's second quarter and full year.
He also reiterated the guidance giving for the second quarter during last quarter's call in October. Additionally, Sun's Ed Zander, COO, said the company is on plan and that strong demand continues. Sun shares lost $6.69 to close at $87.25.
Chipmaker Intel (INTC), a barometer for both the Dow and the Nasdaq, was fractionally higher.
DaimlerChrysler (DCX) drew investors' attention with the Stuttgart-based company's announcement that it fired Chrysler head James Holden and that its U.S. unit wouldn't meet profit goals. Dieter Zetsche, a Daimler-Benz veteran in charge of the commercial vehicles division, has been tapped to turn Chrysler around.
DaimlerChrysler was off $1.06 at $42.50.
Treasury action
Bonds lost ground Friday morning, with the yield on the 10-year Treasury note ($TNX) rising to 5.69 percent, while the 30-year government bond ($TYX) was yielding 5.747 percent.
Construction of homes begun in October clocked in at only a slightly higher rate than a month earlier, while new building activity for the key single-family sector actually slumped last month, government data released on Friday showed.
Housing starts edged up 0.1 percent to an annualized rate of 1.532 million, compared to 1.530 million a month earlier, the Commerce Department reported.
The number of new building permits, which portends future home construction projects, rose by 1.5 percent last month to an annualized rate of 1.537 million units. Building permits had climbed to a 1.518 million clip in September.
A poll of economists by CBS.MarketWatch.com expected an annual rate of new construction at 1.55 million units that month and 1.53 million units for building permits.
In the currency arena, the U.S. dollar was flat Friday morning against the yen and the euro. |
