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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Dealer who wrote (36166)	4/23/2001 9:48:47 AM
From: Dealer	Read Replies (3) \| Respond to of 65232

Good Morning California and Western Porchers! You too Dalin! Did you ask? What Happened? Downgrades! Futures Fall After Chip Downgrade By Steve Sakson April 23, 2001 AMERICA'S CORPORATIONS have been beating Wall Street's reduced expectations for first-quarter profits so far. That, along with a little help from the Federal Reserve, have sent the markets soaring for the past couple of weeks. But, despite the Fed's half-point interest-rate cut last Wednesday, the profit outlook for the first half of the year remains anemic, so if the market pulls back this week, that shouldn't be any big surprise. A couple of analyst downgrades this morning, including a wide-ranging call in the chip sector were weighing on buying sentiment. Ahead of the opening bell, futures were trending lower, indicating that Friday's pullback could continue in early trading. The Nasdaq gave back 0.9% Friday, the Dow lost 1.1% and the S&P 500 fell 0.9%. This morning, S&P futures were about six points below fair value while while the Nasdaq 100 premarket indicator was down a sharp 43 points or 2.2%. Semiconductor stocks, one of the big beneficiaries of the 26% Nasdaq rally over the past couple of weeks, could take a hit today. Merrill Lynch analyst Joe Osha cut his ratings on Intel (INTC) and a trio of communications-chip companies, Applied Micro Circuits (AMCC), PMC-Sierra (PMCS) and Vitesse Semiconductor (VTSS) this morning to Neutral from Accumulate. He said Intel is still expensive at 50 times earnings and the prospects for a near-term recovery in demand are iffy. As for the others, he said a fundamental bottom for the industry's business is still at least a quarter away, so there will likely be some stock selling before then. Among other analyst calls today, Lehman Brothers downgraded the software maker Oracle (ORCL), saying the company faces pricing pressures from competitor IBM (IBM). Weak demand reported last week at Sun Microsystems' (SUNW) could affect Oracle, Lehman said. Leading the earnings list this morning is a trio of Dow components. Exxon Mobil (XOM), the biggest U.S. oil company beat Street estimates by a hefty nine cents, earning $1.44 a share, up 52% from last year. Natural-gas and crude prices remain at historically high levels. Minnesota Mining & Manufacturing (MMM) met expectations for earnings of $1.16, but the company announced plans to cut about 5,000 jobs, or 7% of its work force. And telecom company SBC Communications (SBC) met expectations for 51 cents a share. Those looking for encouragement will take heart from Lehman Brothers' U.S. strategist Jeffrey Applegate. Applegate, one of the Street's more resilient bulls, today said "the enervating bear market of 2000-2001 now appears to be finally behind us" thanks partly to the Fed's aggressive rate cutting. While the economy is still at risk for recession, Applegate said the stock market is acting like it always does when rates go down — it's going up. "Although we are only two weeks into this rally, the market is reprising its historical performance so closely that it's eerie," he said. Applegate has a year-end target of 1400 for the S&P 500. That's 12% from where we are. Overseas today, Japan's Nikkei fell 0.36% and Hong Kong's Hang Seng lost 1%. At midday in Europe, the FTSE 100 was off 0.4%, Paris' CAC 40 lost 0.82% and Frankfurt's Dax lost 1%. Bond yields were lower this morning, as prices rose. The 10-year note yielded 5.26% compared with 5.27% late Friday. The 30-year bond was at 5.75 compared with 5.79% Friday.