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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: J.T. who wrote (9894)	1/26/2002 3:20:50 PM
From: J.T.	Read Replies (1) \| Respond to of 19219

Profit Estimates Rise After 18-Month Drop: U.S. Stocks Outlook By Josh P. Hamilton from Bloomberg New York, Jan. 26 (Bloomberg) -- Wall Street analysts are raising profit-growth projections for the first time in 18 months, as earnings reports from companies including EMC Corp. and Amazon.com Inc. showed investors glimmers of a rebound. Analysts' newfound optimism, coupled with Federal Reserve Chairman Alan Greenspan's testimony to Congress Thursday that an economic recovery may be ``significant,'' helped drive U.S. stocks higher for the first week in three. ``The turn in the economy is probably nearer at hand than people might have thought a couple weeks ago,'' said Kevin Bannon, chief investment officer at BNY Asset Management, which oversees $65 billion. ``Greenspan threw cold water on an immediate arrival a couple weeks ago, but sounded more optimistic Thursday.'' Bannon expects the recession to conclude sometime around the end of the first quarter or beginning of the second. The Standard & Poor's 500 Index advanced 0.5 percent for the week to 1133.28. The Nasdaq Composite Index rose 0.4 percent to 1937.70 and the Dow Jones Industrial Average gained 0.7 percent to 9840.08. The Dow remains down 1.8 percent so far this year, the S&P 500 has declined 1.3 percent and the Nasdaq has lost 0.7 percent. Fourth-quarter profits dropped 19.4 percent from a year ago at the 251 members of the S&P 500 that have reported fourth- quarter results. Yet companies including EMC and Eastman Kodak Co. predicted higher revenues for coming quarters, suggesting the tide is turning more favorable for earnings growth. Analysts, who last week projected an 8.1 percent first- quarter drop in S&P 500 profits from a year ago, now see a 7.3 percent decline. Instead of a 7.8 percent earnings rebound in the second quarter, the consensus is now for a 9 percent gain. `Turning Point' ``January 22 was the turning point,'' First Call research analyst Ken Perkins said. ``The 13-week moving average of upward versus downward profit revisions steadily drifted lower from mid- 2000 until last week.'' Wall Street sees profits for the year rising 16.7 percent over 2001. The number was 15.6 percent on Tuesday. While last year's recession wasn't that severe in economic terms, it was brutal on corporate profits, BNY's Bannon said. ``The most pessimistic group of people you'll find are corporate executives, and they're beginning to admit the worst is past. People are reacting to what they're saying about 2002.'' EMC, down 83 percent from its September 2000 high, gained 9 percent this week. The largest maker of computer data-storage systems had a narrower-than-expected fourth-quarter loss and said it may return to profitability as soon as the second quarter. Amazon.com soared 42 percent for the week. The largest Internet retailer posted its first-ever quarterly profit as it cut costs and holiday sales beat expectations. Sales rose 15 percent to $1.12 billion, exceeding $1 billion for the first time. Kodak Rises Kodak jumped as much as 9.4 percent Thursday, its biggest one- day increase in more than a year, and finished the week up 8.8 percent. The largest photography company said a reviving economy will boost earnings in the second half. Siebel Systems Inc. surged 8.6 percent. The largest maker of programs to manage customer accounts reported fourth-quarter results that beat most analysts' expectations, and the company said it sees sales rising 15 percent in 2002. Also boosting optimism, the Fed's Greenspan sounded a more positive tone than in previous testimony to Congress. ``Some of the forces that have been restraining the economy over the past year are starting to diminish,'' Greenspan said, noting in particular that reductions in excess inventory could lead to a ``significant'' economic rebound. To be sure, few analyst or investors are predicting a return to the 20 percent or better annual market gains of the late 1990s. ``I'm confident we'll have a recovery this year with improved corporate profits, which will help the stock market to a 10 to 15 percent gain,'' Bannon said. ``After the last couple years, that'll feel great.'' He said he's been adding to holdings in companies with a history of slow, steady growth, including Colgate-Palmolive Co. and Verizon Communications Inc., in case the rebound takes longer than expected to arrive. The Week Halliburton Co. had the biggest gain in the S&P 500, soaring 43 percent after assuring investors it probably won't pay huge verdicts in asbestos lawsuits. The shares dropped 73 percent the past year on concern asbestos liability from its Dresser Industries unit might bankrupt the second-biggest oilfield- services company. Cooper Industries Inc. shares rose 18 percent after the electrical products company said it set aside $30 million to cover future asbestos liabilities, potentially removing an obstacle to its purchase by Danaher Corp. Mercury Interactive Corp. rose 21 percent, the second-biggest advance in the benchmark index, after the maker of software to test Web-site performance said fourth-quarter sales and profit exceeded analysts' forecasts. Paper and lumber producer Willamette Industries Inc. climbed 17 percent to $55.16 after agreeing to sell itself to larger rival Weyerhaeuser Co. for $55.50 a share in cash and debt. Applied Biosystems Inc., the largest maker of gene-based drug- discovery equipment, was the S&P 500's biggest loser, falling 28 percent. The Applera Corp. unit said fiscal second-quarter earnings dropped 16 percent and 2002 profit would miss forecasts. Kmart Plunges Kmart Corp. plunged 51 percent for the week to 85 cents after slumping sales and mounting losses led the second-largest U.S. discount retailer to declare bankruptcy. Wal-Mart Stores Inc., which used its larger size and distribution network to undercut Kmart's prices, gained 3.6 percent. The central bank's rate-setting Federal Open Market Committee is scheduled to meet Tuesday and Wednesday. A majority of economists at the 24 firms trading U.S. government debt with the Fed expect the central bank to leave rates unchanged after 11 reductions last year. The government reports the January jobless rate Friday. Companies scheduled to release quarterly earnings next week include: American Express Co. on Monday; ChevronTexaco Corp., FleetBoston Financial Corp., Kraft Foods Inc., Qwest Communications International Inc. and United Parcel Service Inc. on Tuesday; AOL Time Warner Inc. and AT&T Corp. on Wednesday; Calpine Corp. and Delta Air Lines Inc. on Thursday; and UAL Corp. on Friday. *********** I think this article fits in with my 'first call' theme of flat earnings with expectations of earnings growing 5 - 15% moving into 2003. Best Regards, J.T.