Having trouble with SI and the Internet. Here is the Morning Snapshot right after market opening:
Market Snapshot:
Techs, financials hurt stocks
Investors brace for flood of data
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 9:42 AM ET Dec 3, 2001
NEW YORK (CBS.MW) -- Stocks slid as the new trading week began on Monday, with selling pressure concentrated in the tech and financial sectors.
Investors' resolve will be tested this week as a cadre of pivotal economic releases -- culminating with Friday's employment report -- hit the market. The 10-week old rally's resiliency will also be challenged by some key events -- including quarterly updates from tech bellwethers Cisco Systems, Intel and Sun Microsystems.
Market watchers will be monitoring the implications of former energy giant Enron's (ENE) fallout. Bank issues slipped as investors worried about the group's exposure to the beleaguered company, which filed for Chapter 11 bankruptcy protection over the weekend.
The Dow Jones Industrial Average ($INDU) fell 93 points, or 0.9 percent, to 9,758.
The Nasdaq Composite ($COMPQ) subtracted 16 points, or 0.9 percent, to 1,913 while the Nasdaq 100 Index ($NDX) declined 17 points, or 1.1 percent, to 1,578.
The Standard & Poor's 500 Index ($SPX) slipped 0.9 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks lost 0.6 percent.
Volume stood at 63.2 million on the NYSE and at 118 million on the Nasdaq Stock Market. Market breadth was negative, with decliners squashing advancers by 16 to 7 on the NYSE and by 17 to 9 on the Nasdaq.
Trim Tabs noted that closely-watched corporate liquidity improved last week as new offerings slowed following the Thanksgiving holiday. But the fund flow tracker notes that there are many deals in the pike and that no new cash takeovers were announced last week, a negative sign.
"We remain bearish. The new offering calendar will really start to perk this week and should continue to boil for the next three weeks. There [won't] be any real buying power available to absorb the new offerings coming down the pipe," Trim Tabs told clients. U.S. equity funds got $5 billion of fresh cash in October, the research firm said.
Lehman: Stock outlook has improved
Lehman Brothers' Joseph Rooney maintains that the outlook for stocks is "looking better" than it has for a considerable period of time.
"The prospects for a good cyclical recovery in earnings have improved. The volatility in stocks appears to be abating and there are signs of improvement in the corporate finances of the important telecom sector. All this is supportive of the medium term outlook for global equities," the strategist commented in a note to clients.
Rooney believes 2001 will prove to have been the low point for the telecom sector, with an improvement in the group to allow for a better credit backdrop for equities.
Sector and specific stock action
Chip stocks lost traction, with the Philly Semiconductor Index ($SOX) off 0.6 percent. Industry tracker the Semiconductor Industry Association said global sales of semiconductors increased 2.5 percent in October over September's levels, with all regions witnessing sales growth, except for Japan.
"The October sales are another indication that the industry is on track to achieve our forecast of 4.7 percent growth in the fourth quarter," said George Scalise, SIA's president. He said recent data indicates inventory is now largely in balance and that prices are rebounding in some product categories.
Bank and brokerage issues wee among the downside leaders in the broad market. Goldman Sachs analyst Richard Strauss lowered his view on Morgan Stanley (MWD) to a "market "performer," removing the stock from the "Recommended for Purchase List" and lowering 2002 earnings-per-share estimates.
"As the [broker] group has jumped another 10 percent this past month, we feel at least one stock is now definitely ahead of itself, namely Morgan Stanley. On both price-book and price-earnings, Morgan is the most expensive of the pure brokers in our universe of coverage. Meanwhile, the company is among the most exposed to some of the businesses that fell the farthest -- including M&A and retail brokerage," Strauss told clients. Morgan fell 3.3 percent.
Meanwhile, Morgan Stanley analyst Henry McVey assumed coverage of Dow company J.P. Morgan Chase (JPM), assigning a "neutral" rating to the stock from the previous "outperform" while cutting 2001 and 2002 earnings-per-share estimates. Morgan cited near-term concerns about credit, private equity and J.P. Morgan's exposure to Enron's difficulties, adding that it doesn't think an inflection point is likely until the second half of 2002. J.P. Morgan lost 2.6 percent.
Richard Bernstein, chief quantitative strategist at Merrill Lynch, said Enron's bankruptcy filing has drawn parallels to the Long Term Capital Management fiasco of 1998.
"While we are not quite sure those parallels are as close as some have suggested, we think this bankruptcy is strong evidence for one of our major themes: credit risk is being significantly underestimated and underpriced," Bernstein told clients, adding that he remains concerned with tactics to draw consumers such as zero percent financing. He advises investors to focus on only the highest quality financial stocks.
Treasurys mostly higher
Treasurys lost some of their earlier luster but remained mostly higher.
The 10-year Treasury note was up 1/32 to yield ($TNX) 4.75 percent while the 30-year government bond climbed 5/32 to yield ($TYX) 5.275 percent. .
In economic news, October personal income came in at flat levels, as had been expected, while personal spending swelled a record 2.9 percent, more than the 2.4-percent increase that had been expected. Spending had declined 1.7 percent in September. Check economic calendar and forecasts.
Still due out on the data front: October construction spending, expected to have declined 0.2 percent, and the National Association of Purchasing Management Index, seen coming in at 41.6 percent in November.
In the currency sector, the dollar rose 0.2 percent to 123.58 yen while the euro slipped 0.3 percent to 89.25 cents.
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