From Briefing.com: Updated: 08-Nov-02 - General Commentary - Spooked by a cautionary outlook from Cisco (CSCO) and by concern that the aggressive rate cut by the Fed a red flag for the economic outlook, traders decided that now might be a good time to take some recent profits off the table. The Nasdaq's 42 point, or 3%, decline was its worst in several weeks, and ended a 6-day winning streak.
Pullback not that surprising, however, as conditions were ripe for profit-taking. As we've noted over the past couple of days, the good news is largely behind the sector/market - at least over the short-term. With focus shifting away from Q3 earnings to the outlook for Q4 and beyond, fear and doubt likely to creep back into investor psyche. Cisco's cautionary revenue guidance served to push investors in that direction.
Traders also coming to Briefing.com view that Fed's decision to cut rates by 50 rather than 25 basis points was not a magic cure. Yes, decision adds liquidity but it also signals that Greenspan & Co. might see more weakness in the economy than street. Fact raises even more questions about timing of long-awaited earnings recovery.
Can't get too beared up over a one-day drop - especially not after the big advance over the last month. However, with technicals overextended and the market back to worrying about economy, earnings and even war - there's not a lot of reason to get excited about buying Thursday's dip.
Robert Walberg
6:53PM Thursday After Hours price changes vs 4pm ET levels: The equity market spent the majority of the regular session on the defensive, but after hours, there is a slightly positive bias as the S&P futures, at 903, are trading one point above fair value while the Nasdaq 100 futures, at 1030, are trading 3 points above fair value.
Qualcomm (QCOM 36.39 +1.45) has helped contribute to the favorable disposition as it surpassed fiscal Q4 (Sep) consensus estimates for earnings per share and revenue by a comfortable margin. More importantly, the supplier of CDMA-based integrated circuits, provided fiscal Q1 (Dec) and FY03 (Sep) guidance that exceeded current consensus estimates for both its top- and bottom-lines.
Finally, graphics chip company, NVIDIA Corp. (NVDA 13.56 -0.99) is under pressure. Though it reported better than expected results for fiscal Q3 (Oct), NVDA disappointed investors with its contention that revenues and EPS should be relatively flat in fiscal Q4 (Jan) on a sequential basis. In Q3, NVDA reported earnings of $0.09 per share and revenues of $430.3 mln. The Multex consensus estimates for Q4 are $0.12 and $439.9 mln, respectively.
5:23PM NVIDIA sees revenues and EPS flat in Q4 from Q3 (NVDA) 14.55 -1.63: -- Update -- For Q4 (Jan), company expects revenues and EPS to be relatively flat with Q3; gross margins expected to be 26-30%... Current Multex consensus estimates for Q4 are $0.12 and $439.9 mln, respectively... In Q3, NVDA reported earnings of $0.09 per share and revenues of $430.3 mln... NVDA -0.75 at 13.80
5:01PM NVIDIA beats by two cents (NVDA) 14.55 -1.63: -- Update -- Multex has confirmed that the $0.09 per share number is comparable to the $0.07 per share Multex consensus estimate.
4:37PM NVIDIA reports Q3 results (NVDA) 14.55 -1.63: Reports Q3 (Oct) earnings of $0.09 per share, revenues came in at $430.3 mln vs the $425.2 mln consensus; note that $0.09 EPS excludes a charge and reflects a 0% tax rate for the quarter; it is not clear if the consensus estimate was comparable.
4:37PM Qualcomm beats by 4 cents, issues guidance (QCOM) 34.94 -0.91: -- Update -- Reports Q4 pro forma EPS of $0.31, $0.04 better than the Multex consensus; revs were $839.7 mln, vs consensus of $809.6 mln. Co expects Q1 EPS of $0.35-$0.38 and revs to grow 15-22% sequentially, or about $965.7 mln-$1.02 bln (consensus $0.29 and $840.3 mln), and expects FY03 EPS of $1.15-$1.20 and revs to grow 19-23%, or about $3.46-$3.58 bln (consensus $1.09 and $3.25 bln).
4:13PM Coherent Correction (COHR) 18.05 -0.16: On Nov 6, Briefing.com posted an In Play comment on COHR. This comment erroneously reported that COHR reported EPS of $0.08, $0.03 worse than the Multex consensus of $0.11. We have since been informed by Multex that they made a mistake, the correct Multex EPS consensus estimate should have been $0.08, and the comparable actual is $0.09.
Close Dow -184.77 at 8,586.24, S&P -21.11 at 902.65, Nasdaq -42.28 at 1,376.71: Stock indices opened significantly lower and never once showed signs of a substantial rally attempt...after the close yesterday, Cisco (CSCO 12.29 -0.67) warned that revenue would be lower than previously forecast...that is bad news, and the futures traded lower...but CSCO held near flat during the day, while the broad market kept going lower...call it "profit-taking" or whatever, but there was no news to boost the market, and the downward rift held...three pieces of economic news seemed to provide good news...New Claims for unemployment dropped 20,000 for the week ended November 2...
same-store sales at retail chains showed a better-than-expected 3.1% gain year/year for October...September Consumer Credit rose a larger-than-expected $10 billion, suggesting the consumer is likely to continue his/her spending ways...the market wasn't buying into indications of economic strength, however, amid talk that if the Fed cut rates 1/2%, it must know something the market doesn't...the Dow Utilities and Dow Transport indices were also down big today...volume was lighter than most recent sessions...twice as many decliners as advancers, which was not surprising given the overall weakness...
the action today is of some concern as it may reflect a weakening of the underlying bullish trend...bonds staged a huge rally today while a weaker dollar was considered a negative for stocks.DJTA -2.6%, DJUA -3.4%, DOT -5%, Nasdaq 100 -3.7%, Russell 2000 -2.4%, SOX -8.2%, S&P Midcap 400 -2%, NYSE Adv/Dec 1121/2124, Nasdaq Adv/Dec 1131/2191
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