From Briefing.com: Close Dow -128.36 at 9766.45, S&P -17.69 at 1119.38, Nasdaq -64.86 at 1946.52: The equity market didn't fare so well today as a number of items weighed on investor sentiment... In particular, there was an overriding concern that the market may have gotten ahead of itself in discounting the timing and magnitude of an economic recovery in the U.S....
That concern was fueled by earnings warnings from Lucent (LU -1.21) and Ciena (CIEN -3.03), additional job cut announcements at well-known companies like Applied Materials (AMAT -3.79), Qwest (Q -0.30), and Aetna (AET -0.30), and a 0.5% decline in retail sales, ex-auto, for November that suggested the holiday selling season has gotten off to a relatively weak start... Aside from those considerations, investors were also put off by reports of an attack on India's Parliament that prompted India to put its military on alert, an announcement from the ECB that it cut its 2002 economic growth forecast to a range of 0.7-1.7% from 2.1-3.1% that was projected in June, and the Pentagon's release of an unnerving videotape that implicated Osama bin Laden in the Sept. 11 attacks... Overall, there just wasn't much incentive to move the market higher today as the negatives outweighed the positives...
Accordingly, profit taking efforts were broad-based, and steady, as concerns about the pace of economic recovery left investors questioning current valuation levels... With that in mind, it was not surprising to see the tech sector pace the retreat; however, it had plenty of company as the financial, telecom, airline, auto, and basic materials groups were also influential leaders in the selloff... Within the tech sector, telecom equipment and semiconductor shares led the losses... Strikingly, the SOX Index closed below its 200-day simple moving average following a 6.8% decline...
3:08PM IBM (IBM) 120.84 -2.37 (-1.9%): -- Update -- Technical -- Another large cap tech stock that is worth watching in the wake of its 40% advance off the Sep low. While still confined in its recent trading range, without sustained action back above 121.42 and the 122.20 area, it is possible that further downticks could be seen.
3:01PM Lehman on Telecom Suppliers : Lehman advises investors to continue to avoid telecom component vendors, as channel inventories remain high and carrier spending could be down as much as 30% next year. The following suppliers receive a majority of revs from telecom: AMCC, PMCS, VTSS, JDSU, AGR, XLNX, ALTR; and CSCO, LU, NT, ALA, ERICY have less than 10% revs from either telecom or networking; and BRCM and MRVL have no telecom exposure.
2:26PM Intel (INTC) 32.65 -1.43 (-4.2%): -- Technical -- The stock is flirting with important support in the 32.50 area. This marks the highs from April through August which INTC struggled to breach at the end of November. A sustained break below coupled with the overextended technical posture that the three month 83% surge created, would leave the door open for a more extensive pullback.
10:16AM PMC-Sierra (PMCS) 24.66 -3.36 (-11.9%): -- Update -- Technical -- Stock unable to build on initial recovery attempt and is back on the defensive. Now working on support at 24.50/24 (top of Nov trading range, 20 day exp). Failure to rebound back through at least 25.50/25.80 suggests bias remains weak (key resistance thereafter at 26.25). Next support is between 23.50/22.50
9:54AM Semiconductor : -- Technical -- The sector index (SOX) has broken out of its better than week long trading range and below its 200 day simple ma (558.9) which has provide an important floor. Thus far still holding above the top of the Nov trading range at 553/550 but without a sustained rebound back through the moving average/range floor it will remain vulnerable.
8:37AM Lucent Fallout : Hearing some talk about possible fallout from the Lucent (LU) warning; companies to watch include comm ICs that supply to LU: AGR.A, VTSS, PMCS, and AMCC. Contract manufacturers are probably less vulnerable but also worth watching: SLR, FLEX, CLS, and JBL. On the competitive front, Nortel (NT) is most likely to be seeing similar troubles.
7:58AM Goldman Sachs on EMS Co's : Goldman Sachs sees EMS biz accelerating in early 2002; although OEM inventories are still high and valuations for co's are still expensive, group shows clear signs of improving supply chain fundamentals; firm would hold out for better prices, but favors FLEX and CLS.
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