From Briefing.com: The tech sector picked up on Tuesday where it left off on Friday, which is to say it enjoyed another winning session. For the most part, bulls controlled the action throughout the day, having found ample reason in the economic news and analyst research notes to continue their buying efforts.
In particular, the ISM Index for August, which checked in at 54.7 (consensus 54.0), offered further evidence of an improving situation for the manufacturing sector as a level above 50 is indicative of expansion. The August report marked the fourth consecutive increase in the index and the second consecutive month in which the reading was above 50. Granted, the employment component of the report remained weak at 45.9, but employment is a lagging indicator.
Strikingly, the market dipped in the wake of the ISM Index, but it soon bounced back as the selling activity was quickly countered with renewed buying interest. In fact, after experiencing the knee-jerk sell-off, the tech sector trended higher for the remainder of the day and helped the Nasdaq close at its best levels of the session.
Aside from the favorable ISM report, some reassuring comments out of Goldman Sachs's widely-followed technology analysts, Rick Sherlund and Laura Conigliaro, contributed to the sector's bullish momentum. Specifically, Sherlund upgraded the US Software sector to Attractive from Neutral and Conigliaro upgraded the Enterprise Hardware sector to Neutral from Cautious. Both analysts cited firming end market conditions and expectations of a strong December quarter in their notes. In addition, Conigliaro upgraded Dell (DELL) and Seagate (STX) to Outperform from In-Line. A visit to Briefing.com's Story Stocks page will give you the added detail surrounding their research calls.
Another item that fueled the bulls' fire was the ability of the S&P 500 to clear a notable resistance level at 1015.41 (intra-day high for July and top end of 3-month trading range). The breakout was deemed a bullish sign since the S&P 500 was the last of the major indices that had yet to establish a new 52-wk high. As an aside, investors will recall that the lack of confirmation from the S&P 500 following the Dow's breakout in March 2002 eventually precipitated a broad, and severe, market sell-off.
The semiconductor stocks were conspicuously absent from Tuesday's rally as the SOX Index was basically flat for the day. In light of their strong run of late, though, there is nothing too worrisome in the lack of participation from the semis. If anything, it can be taken as a good sign that the market managed to rally without the aid of the influential sector as it points to a broadening of leadership.
As noted in Tuesday's Technical Take, things can change given the already extended run and the negative seasonals. At the moment, though, it isn't worth picking a fight with a market that is looking for, and finding, reason to remain strong.-- Patrick J. O'Hare, Briefing.com
5:49PM Tuesday After Hours price levels vs. 4 pm ET levels: The regular session exemplified the old adage "never short a dull market" as the Dow, Nasdaq, and S&P 500 finished at new 52-week highs after spending most of the day trading in lackluster session. The S&P 500's move above its June/July recovery highs - the last major index to do so - set the stage for the late-day buying drive. The after hours session has held onto all of its gains, with the S&P futures, at 1022, flat with fair value, and the Nasdaq 100 futures, at 1362, also flat with fair value.
In a quiet news night, casino operator Mandalay Bay (MBG 38.15 +0.10) reported a 31% year/year increase in Q2 (July) EPS, to $0.67, which was above the Reuters Research consensus estimate of $0.63. The actual result includes several extraordinary items, and Briefing.com is in touch with Reuters to clarify the exact comparable actual. Revenues, meanwhile, rose 7% to $644.8 mln thanks to moderate growth in the company's Vegas properties. Managment also reiterated its decision to increase its quarterly dividend to $0.25 from $0.23 on August 27 in its press release.
Elsewhere, Federal Express (FDX 68.37 +0.08) received a favorable ruling from the US District Court in Memphis over the tax treatment of jet engine maintenance costs. The court held that the costs were ordinary and necessary business expenses and properly deductible by FedEx. As a result, financial results for Q1 (Aug) will include a one-time benefit of $0.08 per diluted share, which was not included in the guidance issued by FedEx on June 24. At that time, the company said it would earn EPS of $0.52-0.60.
In the trucking space, Werner Enterprises (00C0 25.02 +0.02) declared a 5-for-4 four split of the company's common stock effected in the form of a 25% stock dividend. The stock dividend will be payable on or about September 30, 2003 to stockholders of record at the close of business on September 16. Management also announced a regular quarterly cash dividend of $.025 payable to stockholders of record on October 6, which will pay a slightly higher dividend yield than Werner's previous dividend rate of $.030 after adjusting for the stock split. Competitors of WERN include the likes of ABFS, HTLD, KNGT, ROAD, SWFT, and USFC.
Finally, Compuware Corp (CPWR 6.15 -0.03) announced that after more than 22 years of service, President Joseph A. Nathan will retire from the company on September 30 to pursue personal interests. The company has not yet named a replacement for Nathan. Related companies of the provider of systems software products include the likes of ACN, BORL, CA, EDS, and MERQ.
As for tomorrow's earnings reports, the calendar is once again light with the most noteworthy name being Take Two (TTWO 30.00 +0.25). The only economic report is July Construction Spending and that is due out at 10 ET. The market looks for a slight increase to 0.5%.
For more detail on these, and other after hours developments, be sure to visit Briefing.com's In Play, Earnings Calendar, Guidance, and Economic Calendar pages. -- Heather Smith, Briefing.com
Close Dow +107.45 at 9,523.27, S&P +13.98 at 1,021.99, Nasdaq +31.03 at 1,841.48: A strong day all around...the S&P and Dow set new 52-week closing highs, as did the Nasdaq which had already done that last week...new stock highs on the Nasdaq and NYSE were over 350 for each...advancers led decliners by over 2-to-1 on each of the exchanges...welcome back from vacation...the indices opened slightly higher, helped by gains in European and Asian markets, and by a slew of upgrades to tech stocks from analysts...but even with a strong ISM number at 10:00 ET reflecting good growth in the manufacturing sector, the indices faded until about 11:00 ET...
from there though, it was a steady trend higher, much like happened in a few sessions last week...the market simply shows good resilience as selling pressures just never seem to persist...volume today was average at 1.44 billion shares...news on individual stocks was very limited...today it was a stock market more than a market of stocks, as reflected in the very broad nature of the gains...the Russell 2000 index also set a 52-week closing high...even the SOX semiconductor index, which was down most of the day, ended up 0.54...oil prices were off $2 and gold was down $3...bonds were down sharply...NYSE Adv/Dec 2348/935, Nasdaq Adv/Dec 2203/1037
9:27AM Ultratech Stepper started with a Buy at Berean Capital; target $40 (UTEK) 29.32: Berean Capital initiates coverage with a Buy rating and $40 target, citing the following factors: co is a turnaround story with a compelling product portfolio, Laser Thermal Processing is a disruptive technology and is already gaining traction, and the co is well-positioned in Bump processing with stepper technology, which is one of the fastest growing segments in assembly and packaging.
9:19AM Merrill Lynch on SIA Data : Merrill Lynch note comments on The Semiconductor Industry Association or SIA numbers, which suggests the three-month rolling average billings for the month of July grew +11% year/year. The $12.9 billion rolling average grew +3% sequentially from June's average of $12.5 billion. Actual July billings of $12.2 billion decreased 16% month/month, which is in line with the historical average. In addition, July billings were also up 11% year/year and essentially continues the trend of double-digit year/year comparisons that began in Jul-02. Firm is leaving its worldwide billings forecasts unchanged for FY03 and FY04
8:10AM National Semi upgraded at Soundview (NSM) 29.14: Soundview upgrades to Outperform from Neutral based on their belief that near-term pricing risk has been mitigated, and firm expects a strong 2H03 from the co's wireless biz; firm also thinks that the stock will benefit from multiple expansion over the next several quarters due to the co's improved margin structure as well as what appears to be the beginning of a broader recovery. Target is $35.
Great post Don! I really enjoyed reading it.
RtS |
