MARKET TALK: Storage Where It's At, Merrill Says
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
11:26 (Dow Jones) When investors do return to technology, they should do so
with a new way of looking at the sector, Merrill Lynch says. PC and many
computer chip companies are the growth-engines of yore. Growing demand for
"information digitization" requires systems that can store data quickly and
comprehensively. That makes stocks like Network Appliance (NTAP), EMC (EMC)
and Brocade Communications (BRCD) the best positioned, a Merrill report
states. (KJT)
11:11 (Dow Jones) It's not the macarena, but the Mac-D could help stocks
dance to the upside, one technical analyst says. The moving average
convergence divergence considers overbought and oversold conditions. It
shows that yes, stocks keep falling, but their new lows aren't as steep,
suggesting the selling is becoming less fierce, said Jay Lefkowicz, chief
technical analyst at Morgan Wilshire Securities. (KJT)
11:05 (Dow Jones) March S&Ps and Nasdaq are back to firmer, for now, with
locals dominating action, floor traders say. "It could use a bounce, but
anything more than that sets it up for selling. The fundamentals haven't
changed," one trader says. Tax-loss selling lends pressure, too. (DMC)
11:03 (Dow Jones) Retiring House Ways and Means Chairman Archer, commenting
on choice of Paul O'Neill to head Treasury, calls him "an outstanding choice
because he knows that lower taxes and less government spending are critical
to ensure a vibrant economy. His corporate and government experience is
exactly the right blend to help maintain our economic security in the years
ahead." (JC)
10:52 (Dow Jones) Stocks all over the board this morning, with DJIA now
trying to rally. Semis, banks getting a bid, while Internets generally soft
again. Tax-related selling is expected through the end of the week, so don't
be too surprised by more weakness. Then again, others are calling Wednesday
session capitulation, paving way for bottom. DJIA up 70 at 10390, Nasdaq off
5 at 2326, and S&P 500 flat at 1265. (TG)
10:46 (Dow Jones) There's a 40% chance of a recession next year. That's the
prediction from Wells Fargo chief economist Sung Won Sohn, who says if he's
right you can blame the Fed. It raised interest rates "too fast and too
high," Sohn said. The 40% figure is "about as high a probability as I can go
without declaring a recession," he told bank officials in his annual state
of the economy address Wednesday. (RLG)
10:43 (Dow Jones) Looking for a last minute gift? U.S. government Series I
Bonds have a current rate of 6.49% through April 2001. Bought at par, no tax
is paid until the bond is cashed in. Surely a better investment over the
video game of the month! www.savingsbonds.gov. (DR)
10:36 (Dow Jones) EUR/USD is back up after Philadelphia Fed data. EUR/USD is
at $0.9155, down a touch from intraday high of $0.9170. (CSE)
10:34 (Dow Jones) More good inflation news in the Philadelphia Fed report.
Prices received - a gauge of pricing power - fell to -2.9 in Dec. from -0.1.
Index has been negative 3 of past 4 months, suggesting firms aren't able to
pass cost increases along to customers. (BB)
10:30 (Dow Jones) Darden Restaurants (DRI) may have good earnings and the
potential for revenue and earnings upside, but that's not enough to sway JP
Morgan analyst John Ivankoe from his market performer rating. The analyst
thinks future capital expenditures will go to low-return projects, like $3.4
million to build new Olive Garden restaurants and $415,000 to remodel
existing ones. (DDO)
10:27 (Dow Jones) For Xerox (XRX), it seems that good news is always
followed by bad news. Last week Xerox's stock got a bounce when the company
revealed it would sell its China operations to Fuji Xerox for $550 million
cash. But Thursday Xerox announced 4Q performance would be softer than in 3Q
which sent the stock down nearly 17%. Bill McKee, a Xerox spokesman, says
the company had always expected the fourth quarter to be worse than the
third, but those on Wall Street hadn't factored that into their estimates.
(DLF)
10:21 (Dow Jones) Consumers don't spend what they don't have and that could
spell bad news for gambling stocks. Merrill Lynch analyst David Anders
downgraded five stocks in his gaming universe saying the slowing U.S.
economy may curtail demand for gaming. Also, return on assets has declined
on the Las Vegas Strip to levels not seen since 1992 because of the
high-maintenance resort style of the properties, Anders said. Cut were MGM
Mirage (MGG), Park Place Entertainment (PPE), Aztar Corp. (AZR), Station
Casinos (STN) and Mandalay Resort Group (MBG). (DDO)
10:16 (Dow Jones) The Nasdaq Composite is testing a support band from 2311
to 2225. Technical momentum indicators, although drastically negative, have
been improving, which is typically the signal of a bounce. If 2225 support
is taken out, the next stop is 2075. (SC)
10:11 (Dow Jones) At 13.9, the Philadelphia Fed prices paid index is at its
lowest level since Sept. 1999. Suggests weak activity and falling energy
prices taking some pressure off input costs. (BB)
(END) DOW JONES NEWS 12-21-00
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