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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Frank Pembleton who wrote (16715)	7/31/2002 10:32:20 AM
From: Frank Pembleton	Respond to of 36161

Out of Nortel (NT - TSX) @ $1.53 Regards, Frank P.

To: Frank Pembleton who wrote (16715)	7/31/2002 10:54:15 AM
From: isopatch	Respond to of 36161

Plenty of neg news to drive mkt down <<Wednesday July 31, 10:45 am Eastern Time CBS MarketWatch Weak data roil U.S. stocks <<NEW YORK (CBS.MW) -- Techs and blue chips pulled back Wednesday in response to a double dose of weak readings on the U.S. economy. Second-quarter gross domestic product grew at a disappointing 1.1 percent pace vs. the 2.4 percent growth rate that had been expected by economists polled by CBS.MarketWatch.com. Research firm IDEAglobal said lower second-quarter GDP numbers appear to be very much in synch with the downward adjustment to equities over the same timeframe. More weak data came in the shape of the Chicago Purchasing Managers Index for July, which fell to 51.5 percent in July from June's 58.2 percent. The number, the shabbiest reading since January, was lower than the 56.4 percent level that had been expected by economists. The new orders and employment sub-indexes also faded. The Dow Jones Industrial Average (CBOT:^DJI - News) slid 137 points, or 1.6 percent, to 8,542. The Nasdaq Composite (NasdaqSC:^IXIC - News) erased 31 points, or 2.4 percent, to 1,312 and the Nasdaq 100 Index (NasdaqSC:^NDX - News) dropped 32 points, or 3.3 percent, to 948. The Standard & Poor's 500 Index (CBOE:^SPX - News) wavered 1.4 percent while the Russell 2000 Index (CBOE:^RUT - News) of small-capitalization stocks declined 1.6 percent. Volume came in at 415 million on the NYSE and at 436 million on the Nasdaq Stock Market. Market breadth was negative, with losers beating out winners by 17 to 11 on the NYSE and by 18 to 10 on the Nasdaq. Inside the GDP revisions Data watchers also saw downward revisions to previous GDP readings. First-quarter GDP was downwardly revised to show a 5 percent growth rate from the previously reported 6.1 percent rate. Inventory restocking fueled the brisk rate of expansion early in the year. And 2001 GDP rose only 0.3 percent, a steep downward revision from the 1.2 percent growth rate that had been previously reported. "History now takes on a completely different look as it appears that the economy actually declined in the first three quarters of 2001. We had thought that there was only one quarter of negative growth. Clearly, the recession was real," commented Joel Naroff, chief economist at Naroff Economic Advisors. Goldman ups global equity weighting Goldman Sachs upped its global equity allocation to 65 percent from 60 percent on belief that stocks are "very attractively valued" relative to bonds. The firm is underweight bonds and cash and is neutral commodities and overweight convertibles. The brokerage said other fundamental drivers for its increased equity exposure include: ongoing moderate economic growth, a sturdy rebound in profitability, low inflation, low and stable interest rates, signs that corporations are increasing share buybacks and the likelihood of asset allocation switches into equities by some U.S. pension funds. Goldman also points to contrarian signs that currently favor a higher equity weighting, including high volatility readings and brisk mutual fund redemptions. Goldman's global strategists believe that the technology, telecom and insurance sectors will most likely lead the market turnaround. The brokerage did not modify its recommended regional asset allocation, as it continues to prefer emerging markets, the U.S. and Japan over Europe. Goldman's action follows Morgan Stanley's move on Tuesday to raise its global equity allocation to 70 percent from 68 percent. IBM falls; chip equipment stocks recede Dow component IBM (NYSE:IBM - News) fumbled 2.3 percent after announcing late Tuesday that that it would buy the consulting unit of PricewaterhouseCoopers for $3.5 billion in cash and stock. Big Blue said the deal is expected to reduce earnings by almost 30 cents per share in the fourth quarter. But added that the acquisition could add to earnings starting in the second half of 2003. UBS Warburg said the acquisition renders IBM "even more formidable" and labels the deal "very attractive from both a financial and strategic standpoint." In the chip equipment sector, KLA-Tencor (NasdaqNM:KLAC - News) declined 3.3 percent after recording late Tuesday a fiscal fourth-quarter profit that topped analysts' expectations. But caution reigned in the company's outlook: the equipment firm projects bookings to be flat sequentially in its fiscal first quarter. KLA-Tencor conceded that weak IT spending continues to affect the pace of an upturn. UBS Warburg said that while the equipment industry is clearly in a recovery mode, visibility has diminished in the past month Still, the firm expects KLAC to outperform its peers over the next several quarters and reiterated its "buy" rating on the stock. Checking other stocks in the group, Teradyne dropped 7.1 percent, Applied Materials fell 4 percent and Novellus Systems slid 4.3 percent. Drug firm Eli Lilly (NYSE:LLY - News) slipped 3.2 percent following a Merrill Lynch downgrade to a "neutral" rating from a "buy" on worries about valuation. In other pharma news, Novartis Pharmaceuticals said that a federal jury in Delaware found late Tuesday that Abbott Labs (NYSE:ABT - News) infringed upon a Novartis patent. Abbott edged down 0.7 percent. Bonds catch a heady bid Treasurys reacted very positively to the day's dose of weak weaker-than-anticipated data, which fully support the notion of a sidelined Fed for the foreseeable future. Still, Treasury investors had to contend with a somewhat limited by a larger-than-expected refunding package. Treasury will auction $22 billion in five-year notes and $18 billion in 10-year notes next week. The 10-year Treasury note rallied 23/32 to yield (CBOE:^TNX - News) 4.50 percent while the 30-year government bond gained 29/32 to yield (CBOE:^TYX - News) 5.335 percent. Larger-than-projected supply in the long end prompted a rally in shorter-dated issues, producing a steeper Treasury yield curve. Still ahead is the Fed's Beige Book report on economic conditions is due out in the afternoon. The dollar weakened modestly from earlier levels following the release of the economic data. Cornering the exchange rates, the buck erased 0.4 percent to 119.75 yen while the euro declined 0.4 percent to 97.96 cents, reaching its lowest level in over three weeks.>> biz.yahoo.com