MARKET TALK: More Props For The Consumer
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
12:11 (Dow Jones) Dallas Fed President Robert McTeer said in a speech in San
Antonio that despite the high-tech sector's downturn, the service sector and
the consumer are sustaining the U.S. economy. (JNP)
11:59 (Dow Jones) The key numbers for the Nasdaq are 2060 and 2100, says
Hilliard Lyons technical analyst Dick Dickson. A close above 2100 should
confirm the break of the downward line and indicate that a new short to
intermediate term rally has begun. "A break and close below 2060, though,
would lessen chances of a valid trend break and probably mean more churning
in the 2000-2100 area for Nasdaq over the next few weeks." The Nasdaq, which
has a high today of 2079, is down 31 at 2056. (GS)
11:46 (Dow Jones) Next Level Communications (NXTV) said it needs to raise
$35 million to meet its liquidity needs through Dec. 31. Next Level also
needs additional external equity or debt financing by the end of the first
quarter of 2002 to maintain current operations. Next Level had $16.9 million
in cash and cash equivalents as of June 30. (RG)
11:35 (Dow Jones) The recent selloff in Qwest Communications (Q) is
overdone, Lehman analyst Blake Bath says. "Qwest has been under pressure due
to concerns regarding accounting questions centering on the quality of its
revenues, its ability to meet current and future revenue and EBITDA guidance
and recent management silence on these issues," Bath said, while reiterating
his strong buy. "We believe the $12 billion reduction to Qwest's market cap
over the last month is an extreme overreaction, even under the worst-case
scenario." Shares of Qwest recently traded up 2.4% in heavy trading. (JDB)
11:26 (Dow Jones) Sung Won Sohn, chief economist with Wells Fargo, says the
recent employment trend is consistent with the view that the economy is
"scraping the bottom and showing some signs of improvement. Nevertheless,
the economy is not out of the woods yet," says Sohn. "The probability of a
recession is still about 30%." (CMN)
11:18 (Dow Jones) Things don't look so hot now, but one thing major stock
averages have going for them is that they didn't jump out to early gains.
This week has seen a few sessions start with nice promise, only to fade. The
Nasdaq may be short-term overbought, which could hinder a snapback, but
there also could be some recovery room later in the session. DJIA off 90 at
10460, Nasdaq off 32 at 2055, and S&P 500 slips 11 to 1208. (TG)
11:10 (Dow Jones) i2 Technologies (ITWO) said Thursday it may write down a
chunk of the value of Aspect Development, which it bought for $9.3B in stock
at the height of the tech boom last March. SG Cowen expects i2 to take $5B
non-cash charge to write off goodwill from that deal this quarter. A healthy
amount considering i2's market cap is $4B. (MLP)
11:05 (Dow Jones) Financial futures strategist for Merrill Lynch, David
Horner, says bond yields shouldn't go up a lot from here. While further weak
data should cushion a further upturn in bond yields, anticipation of the
tax-cut effect should boost the economy and weigh on them, he says. (CMN)
11:00 (Dow Jones) Charles Blood of Brown Brothers Harriman becomes the
latest strategist to ratchet down earnings expectations for S&P 500 members.
Blood now expects the companies to earn $50, not $52.50, this year, and
$54.50, not $57, next year. But Blood remains firmly bullish. "Stock prices
lead earnings, not the other way around," he says. (KJT)
10:54 (Dow Jones) At the end of July, nearly 65% of analyst ratings were in
"buy" or "strong buy" categories. Only 1.5% were in "sell" or "strong sell"
regions. So reports Chuck Hill of Thomson Financial/First Call. "That means
the number of buys of all kinds were 47 times the number of sells of all
kinds," Hill said in recent Congressional testimony. "That much of a
positive bias is hard to justify." Last August, that ratio was about 99 to
1. (NL)
10:45 (Dow Jones) Wachovia (WB) is holding a 10:30 a.m. shareholder meeting,
where they are expected to announce the results of the vote to approve its
proposed merger with First Union (FTU). A preliminary count showed
shareholders approving the $14.18 billion sale by a narrow margin, which
would leave hostile bidder SunTrust (STI) all by its lonesome. Let's just
hope they didn't use butterfly ballots. Stay tuned. (TAS)
10:34 (Dow Jones) Payrolls have not changed the view on what Fed will do at
the August meeting, says Gerald Lucas, senior government strategist with
Merrill Lynch. And after that, Fed will be in "wait-and-see" mode. He says
data to watch are retail sales and capacity utilization, to see if they will
signal the manufacturing sector has bottomed out. (CMN)
10:26 (Dow Jones) PG&E's (PCG) bankrupt utility unit Pacific Gas & Electric
Co. has $873 million in total defaulted commercial paper outstanding as of
June 30 and is also in default on $938 million in outstanding borrowings
under its bank credit facility. In addition, the utility hasn't made any
payments on its bank loan or defaulted commercial paper during the quarter.
(JM)
10:13 (Dow Jones) Preliminary PC motherboard and notebook shipments from
Taiwan for July look better than expected, Merrill says. However, firm is
not interpreting the numbers as indicative of improving end-user demand,
with checks indicating demand is still weak. Instead, Merrill calls
improvement seasonal build around back-to-school coupled with easy June
comps. (TG)
10:05 (Dow Jones) NAPM says the service sector economy contracted in July
after a modest expansion the prior month. The July index stood at 48.9
versus 51.2 in June. Prices paid moved to 49 from 55.5 the prior month,
while employment losses moderated to 46.4 from 45.1 in June. (MSD)
9:59 (Dow Jones) Stocks losing some more ground. Data have investors in flux
- signs of imminent recovery, or temporary lull before economy really tanks
- and that has stocks in limbo, as well. Techs cooling after mini rally. SOX
off 2%, Nasdaq Computer index eases 1.5%. Just four Dow names - Disney,
Coke, Boeing, and Honeywell - moving higher. DJIA off 72 at 10480, Nasdaq
eases 19 to 2068, and S&P 500 falls 8 to 1212. (TG)
9:44 (Dow Jones) Some Tsys strategists are musing whether the U.S.
unemployment rate, which printed a clearly lower-than-expected 4.5% in July
report, may not rise above the psychologically important 5% level when the
current economic downturn reaches its weakest point. Clearly bad news for
Tsys, still lower on session but off their lows following their initial
post-employment report selloff. (JNP)
(END) DOW JONES NEWS 08-03-01
12:11 PM
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