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DAILY WRAP-UP
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The markets surged in support of business-friendly proposals said to be
part of the new U.S. economic stimulus plan, which will be unveiled
Tuesday. Stocks were strong as leaked versions of President Bush's
proposals highlighted the end of taxes on dividend income.
Without the taxes associated with dividends, it's hoped investors would
begin to invest in equities, and especially in dividend-paying companies
like financial, utility and telecoms issues. The wealth created by the
stock investments would spur businesses to re-invest and grow.
The Dow Jones Industrial Average climbed 171.88 points or 2%, and the
Nasdaq composite finished with a gain of 34.18 points or 2.46% to 1,421.26.
The broad S&P 500 advanced 20.44 points or 2.25% to 929.03. Volume on the
NYSE improved to 1.399 billion shares, and some 1.545 billion shares traded
hands at the Nasdaq.
Stocks that pay dividends were higher with utilities and financials leading
gains. Reports suggest that the stimulus plan includes a provision to
eliminate taxes paid on corporate dividend payments. J.P. Morgan Chase
(NYSE: JPM) finished up 7.86% to $27.98. Consolidated Edison (NYSE: ED)
rallied 4.9% to $45.99. Southern (NYSE: SO) jumped 5.84% to $30.81.
New competition rules by the Federal Communications Commission bolstered
gains in the telecom sector. According to published reports, regulators
could release local phone service operators from requirements to rent their
networks to competitors at discount rates.
The purported beneficiaries of this new regulation were the Bells. SBC
Communications (NYSE: SBC) soared 8% to $31.19. BellSouth (NSYE: BLS) rang
up gains of 7.85% to $29.25 and Verizon (NYSE: VZ) jumped 8.95% to $44.07.
However, the new rules would likely hurt AT&T (NYSE: T). Ma Bell announced
it was slashing 3,500 jobs and taking about $1.5 billion in restructuring
and asset-impairment costs for the fourth quarter. The Dow component
finished the session with a mild loss of 0.65% to $27.48.
In economic news the Institute for Supply Management said that its
non-manufacturing index fell to 54.7 in December. While the measure of the
services sector did not meet expectations of 55.5, it continued to register
a figure above 50 - indicating expansion.
Deutsche Bank Securities raised its estimation of the semiconductor
industry to a "buy." The firm said Lam Research (NASDAQ: LRCX), Teradyne
(NYSE: TER) and Novellus Systems (NASDAQ: NVLS) could improve earnings by
as much as 15% to 20% in Q1. Lam Research rocketed 9.21% to $12.57, and
Novellus raced 7.6% to $33.57. Teradyne sprinted 8.04% to $15.32.
Apple Computer (NASDAQ: AAPL) gave back early gains and eased 0.07% to
$14.89. Street rumors said the company would unveil a new iPod at MacWorld
in San Francisco this week.
In M&A news, Automatic Data Processing (NYSE: ADP) said it was buying rival
payroll processor ProBusiness Services (NASDAQ: PRBZ) for $17 per share in
cash. ADP finished ahead 0.27% to $40.50, while its intended takeover
skyrocketed 60.72% to $16.49.
In small cap trading, the Russell 2000 advanced 11.27 points or 1.71% to
516.04, while the S&P600 index gained 3.06 points or 1.53% to 203.17.
Some of the small cap stocks making big moves included McData (NASDAQ:
MCDTA). The data storage firm soared 16.31% to $9.77 on volume of 9,176,659
after it upped revenue and earnings guidance for the fourth quarter.
Hotels.com (NASDAQ: ROOM) tumbled 25.44% to $44.02 on volume of 10,798,659.
The Dallas-based Internet hotel reservations firm said its fourth quarter
revenue would miss expectations by more than $10 million citing continuing
weakness in hotel occupancy and daily room rates. As well, Hotels.com said
would repurchase up to $100 million of its common shares.
In commodities trading on the New York Mercantile Exchange, February crude
oil futures fell $0.98 to $32.10, and February natural gas traded $0.41
lower to $4.935. February gold futures gained $0.50 to $352.10.
On the major Canadian stock average, equities traded in a tight range
throughout the session. Selling in the gold group hobbled gains on the
broader market, but surging tech issues helped solidify the advance on Bay
Street.
The TSX composite climbed 64.61 points or 0.95% to 6,837.27, while the
small cap Venture index eased 0.53 points or 0.05% to 1,102.15.
Nortel Networks (TSX: T.NT) rallied 8.25% to $3.15. Graphics chipmaker ATI
Technologies (TSX: T.ATY) climbed 1.83% to $8.34 after several product
announcements. Zarlink Semiconductor (TSX: T.ZL) soared 10.77% to $4.32 and
BlackBerry maker Research in Motion (TSX: T.RIM) gained 5.39% to $22.30.
Geac (TSX: T.GAC), which makes business software applications, announced
today that it had hired a former Terra Lycos executive to fill roles as
chief technology officer and chief information officer. Timothy J. Wright
will work with senior management to develop strategic partnerships and
acquisitions and steward product development. Geac shares shed 0.69% to $4.32.
Sherritt (TSX: T.S) announced it had considerably enriched its takeover bid
for Fording (TSX: T.FDG). Sherritt Coal Partnership, which is a cooperative
effort of Sherritt International and the Ontario Teachers Pension Plan,
said it would increase the minimum cash allocation of its $1.8 billion
offer to $965 million from $850 million with the remaining share swap
valued at $35 per share. The announcement is aimed at thwarting Fording's
proposed deal to convert its assets with assets from Teck Cominco (TSX:
T.TEK.B) to an income trust. Shareholders are set to vote on the Fording
proposition January 22. Fording stock was up 1.45% to $33.50, and Sherritt
added 0.67% to finish at $4.51.
In the energy patch, Petro-Canada (TSX: T.PCA) gained 0.79% to $49.90 after
announcing it had garnered approval from the British Department of Trade
and Industry to develop the Clapham oil field in the central North Sea. The
field is expected to have recoverable reserves of 19.5 million barrels of
oil, and could be developed for $175 million.
In the consumer discretionary stocks, hotels were in the minus column after
Hotels.com said sales and profit for the fourth quarter would miss its
projections. Fairmont Hotels (TSX: T.FHR) fell 2.31% to $36.00 and Four
Seasons (TSX: T.FSH) slipped 2.14% to $43.50.
In the heavily weighted financial group, the Canadian Imperial Bank of
Commerce (TSX: T.CM) was up 1.6% to $45.63. The lender announced it had
completed the previously announced sale of its U.S. private client and
asset management units to Fahnestock Viner Holdings (NYSE: FVH.A).
Gold stocks backed off early gains, losing 1.5% despite increases in the
price of the yellow metal on commodity markets. The price of gold futures
rocketed to multi-year highs as investors continued to fret over the
possibility of war with Iraq. Iamgold (TSX: T.IMG) gained 2.5% to $7.95,
while Agnico-Eagle (TSX: T.AGE) slipped 2.82% to $23.44.
The Canadian dollar was worth US$0.6409.
TODAY'S HEADLINES
************************************
EMC RAISES Q4 EARNINGS FORECAST
EMC (NYSE: EMC) shares soared in after-hours trading Monday after the
storage technology giant raised its financial estimates for the fourth quarter.
cbs.marketwatch.com
AT&T TO CUT 3,500 JOBS
AT&T Corp. (NYSE: T) will slash 3,500 jobs and record more than $1.5
billion in restructuring and asset- impairment costs, which analysts said
will wipe out fourth-quarter profit at the biggest U.S. long-distance
telephone company.
quote.bloomberg.com
GROWTH OF US SERVICE SECTOR SLOWS
The growth of the US service sector, which provides about 80 per cent of
the nation's jobs, slowed in December, according to a widely-watched survey.
news.ft.com
HOTELS.COM SAYS PROFIT BELOW FORECAST
Hotels.com (NASDAQ: ROOM), which sells hotel reservations on the Internet,
said fourth-quarter profit and sales rose less than expected and cut its
2003 revenue forecast as room prices fell.
quote.bloomberg.com
ADP BUYS PAYROLL PROCESSING RIVAL FOR $500M
Automatic Data Processing (NYSE: ADP), the leading provider of corporate
payroll processing services, on Monday agreed to acquire rival ProBusiness
Services (NASDAQ: PRBZ) for $500m in cash.
news.ft.com
TODAY'S HIGHLIGHTS
************************************
Market Summary At 5:19:39 P.M. ET
---------------------------------------------------------
Symbol Close Change Change(%) Market Name
DJI 8773.57 171.88 2.00 DOW JONES INDUSTRIAL
NYA 495.71 9.55 1.96 NYSE COMPOSITE
COMP 1421.33 34.25 2.47 NASDAQ COMPOSITE
XAX 839.61 1.98 0.24 AMEX COMPOSITE INDEX
SPX 929.01 20.42 2.25 S&P 500
SML 203.17 3.06 1.53 S&P 600 SMALLCAP
RUT 397.00 6.69 1.71 RUSSELL 2000
NDI 184.60 1.85 1.01 INDIVIDUAL INVESTORS 500
IV.JX 1102.15 -0.53 -0.05 S&P/TSX VENTURE
COMPOSITE INDEX
IT.TSXCI 6837.27 64.61 0.95 S&P/TSX COMPOSITE |
