DJ MARKET TALK: 50, 75, 150 BP Cut? Does It Really Matter?
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
12:43 (Dow Jones) The markets believe an easing Fed is the key to making
things better. The scary thing is it's very possible another 150 bps or more
in rate cuts could occur with little long term relief in the equity markets
because earnings outlooks haven't sufficiently improved. Since high interest
rates didn't get us into this mess, why should we believe lower rates alone
will necessarily get us out? (GK)
12:36 (Dow Jones) Yahoo! (YHOO) remains the most valuable web-only property,
despite losing market share to Microsoft (MSFT), according Merrill Lynch
analyst Henry Blodget. In sorting through the February Web ratings report,
Blodget notes that Yahoo's minutes and pageviews - important when it comes
to monetizing traffic - are still among the highest in the industry among
web-only usage. Blodget, though, is concerned that Yahoo is losing market
share to Microsoft, which has secured the No. 2 spot behind AOL. (GSX)
12:19 (Dow Jones) Morgan Stanley Dean Witter analyst Henry McVey lowered
earnings per share estimates Tuesday for Merrill Lynch (MER) to $3.91 from
$4.02 for 2001 and to $4.48 from $4.56 for 2002. He also reduced his price
target to $75 from $82. Shares traded recently at $53.23, up 3.9%. McVey
said in a research note that he considers additional downsizing and asset
sales likely and believes Merrill must deliver margin improvement at the
business unit level, in particular asset management and retail brokerage.
(CWN)
12:08 (Dow Jones) June S&Ps are pulling off contract lows as floor traders
believe the market might be trying to return to about halfway back on the
day, around 1192. Floor traders suspect part of the weakness was margin call
selling, but they add if it was, the selling was light. "It didn't trade
like there was a lot of redemptions because it's coming back a little," he
says. (DMC)
11:59 (Dow Jones) Nymex oil complex sinks under pressure from persistent
signs of economic slowdown, underscored by stocks sell-off Monday. "The
market's weak and very quiet," analyst says. "It's surprising given
inventory numbers last week. It's probably in sympathy with the stock
markets." April crude -30c at $27.70/bbl. (MSX)
11:46 (Dow Jones) Stocks weakening across board, following growing softness
in DJIA. 3M, IP, MRK, and KO biggest losers on Dow. Nasdaq holding gains but
is well off highs. Technicians warned to look out for this sort of scenario
- early gains followed by a pullback - and if it picks up some momentum,
heads up. DJIA off 96 at 10112, Nasdaq gains 16 to 1939, and S&P 500 falls 8
to 1171. (TG)
11:41 (Dow Jones) Economist Larry Kudlow laments that "Greenspan & Co.
remain in denial about the stock market message as they continue to delay
much-needed liquidity additions and interest rate cuts." (JC)
11:35 (Dow Jones) Rebel attacks in Indonesia have forced Exxon Mobil (XOM)
to shut down some production in the Aceh province temporarily. Banc of
America's Tyler Dann does not think shareholders should be concerned because
the effect to Exxon Mobil's earnings will be "minimal." In a worst case
scenario, the event might shave a penny off 1Q earnings, Dann said. Exxon's
Indonesian natural gas operations, in total, account for about $500 million
in annual earnings, or 15 cents a share, Dann estimates. (CCC)
11:23 (Dow Jones) Alliance Pharmaceutical (ALLP) investors can breathe a
sigh of relief. Not only do data seem to point to the idea that the
company's lead drug Oxygent did not cause strokes, but it plans to
re-initiate clinical testing that had suspended enrollment in January and
had jeopardized its relationship with collaborative partner Baxter
International (BAX). Alliance shares traded 53.2% higher. (BMM)
11:15 (Dow Jones) "Caution" and "selectivity" are the key words for electric
utility investing, says Lehman's Daniel Ford, whose research team launched
coverage of more than 40 stocks Tuesday. He recommends investors overweight
independent power producers in their portfolios through the third quarter.
Among his top picks are NRG Energy (NRG) and Calpine (CPN). In the electric
utility sector, Ford favors DTE Energy (DTE), FPL Group (FPL), and Xcel
Energy (XEL). Active Power (ACPW) is Ford's top pick in the
electro-technology sector. All Ford's top picks are rated a strong buy.
(CCC)
11:08 (Dow Jones) You think Yahoo (YHOO) shares have suffered enough? Fred
Moran doesn't. The Jefferies analyst reiterated his "hold" rating and $10
price target Tuesday, saying the stock no longer warrants a premium
valuation. The shares recently were at $16.56, up 19 cents. Yahoo warned
last week that it will break even in 1Q and it withdrew guidance for
full-year 2001. "Given negative growth and margin pressure, we believe the
stock remains vulnerable to further declines," Moran says. Based on Monday's
close, Yahoo trades at 9.2 times projected 2001 revenue, more than twice the
multiple of Yahoo's peer group, he says. (PDL)
10:55 (Dow Jones) Stocks mixed. Nasdaq up 50 at 1973, DJIA flat at 10205,
and S&P 500 up 3 at 1183. Oils and drugs soft, financials, computers move
up. As stocks look for direction, keep in mind that biggest of selloffs on
the DJIA have often been followed by large gains the next session. Last
April's 600-point collapse, for example, was followed up by a 276-point
advance. (TG)
10:46 (Dow Jones) June DJIA struggles to hold gains, traders say. "S&Ps are
holding up the Dow," one floor trader says. "If we can hold, then the Dow
should be OK." He points out, though, if stocks in general start to weaken,
it could be margin call selling in cash hitting the futures. "We don't know
if that's going to happen, but it's something to keep an eye out for," he
says. (DMC)
10:42 (Dow Jones) What economic slowdown? At a time with other industrial
companies are stumbling and tightening their belts amid the slowing economy,
Tyco International (TYC) rolls on. With Tuesday's deal to buy CIT Group Inc.
(CIT), the Bermuda-based conglomerate continues a brisk acquisition pace.
Tyco said its balance sheet will remain strong after the $9.2 billion deal
so it can do more deals if necessary. For good measure, Tyco also issued a
positive earnings outlook. (CCW)
10:33 (Dow Jones) Technicians like to look at Fibonacci retracement levels
to determine where a stock or index may be heading. Common retracement
levels from an index's high are 38.2%, 50%, and 61.8%. On Nasdaq, these
retracement levels - 3295, 2727, and 2160 - have all been taken out. Another
common retracement level is 76.4%, which puts the Nasdaq's next leg of
support at 1457, according to Al Schwartz of Schaeffer's Investment. (TG)
10:24 (Dow Jones) "We expect a distinctly weak tone in the economic data to
be released over the next four weeks," say economists at Goldman Sachs. (JC)
10:15 (Dow Jones) Monday's action in stocks was not capitulation and did not
represent climactic selling, says Dick Dickson of Scott & Stringfellow. Why?
"Not enough volume," he says. Watch the quality of today's rally (if we get
one) as an indication of whether we get an oversold bounce or something
longer-lasting - several weeks at least. "Be careful of an early rally that
fails, though, because that could mean the market is going into a
capitulation phase," he says. (TG)
10:00 (Dow Jones) Only 10% of global fund managers expect a swift "V" shaped
U.S. recovery, the latest Merrill Lynch/Gallup survey shows. Some 64% of
those questioned in all the regular surveys expect a gradual "U" shaped
recovery, with 18% looking for sustained slow growth for 12 months. Fed
funds are expected to be cut by 89 BP over next 12-months to 4.61%. A total
of 222 institutions with $8,644B under management took part in the surveys,
from March 2-7. (NK)
(END) DOW JONES NEWS 03-13-01
12:43 PM
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