Market Open Conflicting tech news sends major indexes in opposite directions
at the opening bell
Vancouver, Apr 09, 2002 (smallcapcenter.com via COMTEX) -- Investors had
trouble making their minds up this morning, pushing the Dow up and the Nasdaq
down on conflicting news from computer maker Compaq (good news) and
telecommunications bellwether Nortel (more bad news).
Compaq (NYSE: CPQ) gained 2.3% after announcing late Monday that first-quarter
results would either meet or beat current Wall Street estimates.
Nortel Networks (NYSE: NT)(TSE: T.NT), on the other hand, said Tuesday it will
need all of its reserve bank credit of $1.75 billion, and further warned that
first quarter sales will fall short of earlier forecasts.
The move comes just days after Moody's Investors Service downgraded Nortel debt
to "junk" status, a designation that significantly raises the cost of loans for
companies. Nortel shares had already been hammered on that news, and are
actually up slightly in morning trading today.
Nortel is expecting revenue of $2.9 billion, below the $3 billion in sales
projected earlier by Wall Street analysts. The shortfall reflects a 16% fall
from the previous quarter.
At 10:14 a.m. EDT, the Dow Jones Industrial Average was up 11.83 points, or
0.12%, at 10260.91, while the Nasdaq Composite Index was off 9.88 points, or
0.55%, at 1775.99. The S&P 500 Index was off 1.89 points, or 0.17%, at 1123.22.
In small cap trading, the S&P 600 Index was up 0.98 point, or 0.4%, at 248.53,
and the Russell 2000 Index was up 1.62 points, or 0.32%, at 504.63.
In Canadian trading, the Toronto Stock Exchange 300 Index was off 23.5 points,
or 0.3%, at 7724.00, and the Canadian Venture Exchange S&P/CDNX Composite Index
was down 2.56 points, or 0.22%, at 1166.05.
As the politics in the Middle East heat up, the equity markets in North America
are cooling down, but an apparent concession Monday by Israeli Prime Minister
Ariel Sharon may be perceived as good news on Wall Street today.
After increasingly firm calls from U.S. President George Bush for Israel to pull
its military operations out of Palestinian territories, late Monday, Israel
Radio reported the Israeli army will begin leaving two West Bank towns in the
next few hours. An aide to Sharon confirmed to CNN that the army will pull out
of "one or two" West Bank cities.
Wall Street will also be focused on the domestic front, where several small caps
are reporting their quarterly numbers. Included under that guise are CARBO
Ceramics (NYSE: CRR), Roadway Express Incorporated (NASDAQ: ROAD) and Sonus
Pharmaceuticals (NASDAQ: SNUS).
There is no scheduled economic news out today.
A profit warning from Big Blue and some saber rattling over oil prices tempered
a broader positive move in the markets Monday as the North American indices
closed mixed.
In small cap trading, the Russell 2000 finished the day at 503.01 up 5.25 points
or 1.05%. The S&P 600 closed at 247.55 up 2.73 points or 1.12%.
Nasdaq finished at 1785.87 up 15.84 points or 0.89% while the Dow ended the day
at 10249.08 down 22.56 points or 0.22%. The S&P 500 closed at 1125.11 up 2.55
points or 0.23%.
Volume on Nasdaq was light at 1.59 billion, while volume on the New York Stock
Exchange was 1.09 billion. On the NYSE, advancers outnumbered decliners 1829 to
1332. On Nasdaq, there were 1913 advancing stocks and 1645 declining equities.
Peter Cardillo, chief market strategist at Westfallia Investments told
smallcapcenter.com that IBM (NYSE: IBM) and the oil situation in the Middle East
put downward pressure on the markets Monday.
"Obviously, the oil prices running up on news that Iraq will hold back oil for
thirty days gave the markets a lot of worries in the early part of the session,"
said Cardillo. "Of course IBM was the culprit for the intense sell off."
IBM's management this morning issued a surprise warning that it will likely
record a weak first quarter. Iraqi President Saddam Hussein announced Monday
that oil exports will be stopped for a month to protest Israel's military action
against the Palestinians.
Cardillo said the markets made a comeback late in the day because stocks hit an
"oversold condition."
Going forward, he said rising oil prices may have some upside for U.S investors
because it may dissuade Fed chair Alan Greenspan from tightening interest rates.
"Higher oil puts interest rates on hold because rising oil prices are like
rising interest rates. They're a tax on the economy."
In the near term, he predicted that the markets could revisit some lowly ground
if negative news keeps piling up.
"I think the market is going to be very choppy and continue to trade near the
low end of the trading range and consolidate barring any major negative news.
Otherwise, there is a good possibility we could be headed for Dow ten thousand
and the Composite could be headed for Sept 11 lows."
Small cap movers Monday included Immune Response (NASDAQ: IMNR). The biotech
announced late Friday that its board has approved a 1-to-4 reverse stock split,
subject to stockholder approval on May 23. The Carlsbad, Calif.-based company
also plans to ask shareholders to approve a private offering of securities. In
the past year, Immune Response dropped a study on an AIDS drug and lost its
partnership with a unit of Pfizer (NYSE: PFE).
New World Restaurant Group (NASDAQ: NWCI) tumbled after Moody's put the bagel
restaurant franchiser under a review for downgrade. The SEC is investigating to
see if the company provided accurate information. Moody's said its move affects
$140 million of debt, and that a $155 million offering by New World is now in
doubt.
In Canadian trading, the Toronto Stock Exchange 300 Index closed at 7747.60 down
34.51 points or 0.44%. The S&P CDNX Composite ended the session at 1168.61 down
7.89 points or 0.67%. Peruvian Gold Limited (CDNX: PVO) and New Blue Ribbon
Resources Ltd. (CDNX: NBL) were the small cap exchange's most actively traded
stocks.
In commodities trading on the New York Mercantile Exchange, May crude oil ended
the day at $26.98 up $0.77. May natural gas closed at $3.33 up $0.05 and June
gold closed at $301.40 up $0.40.
The Canadian loonie finished down at US$0.6263.
By Staff Writers
Copyright 2001 Stockgroup.com, All rights reserved |
