From Briefing.com: 5:28PM Weekly Wrap: It was a short week of trading, and if you looked only at the final numbers and volume totals, you'd conclude that it was an uneventful week. It just so happens, though, that there was quite a bit going on this week. The issue was that nobody really wanted to show much conviction going into the Easter weekend, which is known for peace, but regrettably, now evokes heightened concerns about possible terrorist activity.
To be sure, geopolitical events were in the spotlight again as an escalation of fighting in Iraq, and specifically Fallujah, cast a pall on the proceedings by breeding a sense of uncertainty. Normally, such a situation would benefit the Treasury market, but with burgeoning concerns about a potential Fed rate hike, the fixed income market held little appeal for investors. The benchmark 10-yr note jumped 6 basis points in the abbreviated week to 4.21%.
Gold, which is regarded as a safe-haven asset, was down slightly for the week to $420.70/oz, as the dollar's strength against the yen and the euro served as a deterrent for safe-haven seekers. Sticking with commodities, the spike in crude futures, which followed a bearish inventory report, also acted as a deterrent for the stock and bond markets, as it re-ignited concerns about inflation and the added tax rising energy prices imposes on the consumer. For the week, crude futures gained 8.0% to $37.14/bbl.
The jump in oil prices propped up many of the energy stocks as the oil drilling, oil & gas refining, and oil & gas exploration groups were among the best-performing in the S&P. The top spot, though, went to Internet Software and Services thanks to Yahoo! (YHOO), which delivered a solid earnings report replete with strong guidance. Following its earnings results, YHOO gained $7.86, or 16.3%, to close the week at $56.21.
The Q1 reporting period officially began after Tuesday's close when Alcoa (AA) posted its results. The Dow component started things on a sour note when it came up a penny short of the Reuters Research consensus estimate. From an earnings standpoint, Alcoa, and Nokia (NOK), which issued an earnings warning, were the disappointments for the week.
Overall, though, the earnings news was predominantly good. Not only did Yahoo! knock the cover off the ball, but General Electric (GE), Genentech (DNA), and Research In Motion (RIMM) all surpassed their respective consensus estimates. Dell, Inc. (DELL), Black & Decker (BDK), Cummins (CMI), and Cigna (CI) were notable companies that raised their revenue and/or earnings guidance. A host of retailers did the same after reporting March same-store sales results on Thursday. Many of the stocks, though, failed to benefit as investors sold on the news, believing it had already been priced in and that comparisons will be more difficult in the latter half of the year.
On the economic front, the key news carried a bullish bias in terms of economic activity as the ISM Services Index and the weekly initial claims report were both better than expected. The former checked in at 65.8 (consensus 61.5), indicating expansion on the services side of the economy; meanwhile, there were 328K claims (consensus 340K) for unemployment benefits, which marked the lowest claims level since Jan. 13, 2001. --Patrick J. O'Hare, Briefing.com
Close Dow -38.12 at 10,442.03, S&P -1.20 at 1,139.33, Nasdaq +2.62 at 2,052.86: While today's session started out as the next chapter in "The Great Expectations", the early enthusiasm soon turned to bitter disappointment as the major averages spent the entirety of the session drifting lower despite a flood of upbeat corporate and economic developments...
Specifically, the market was served up better than expected earnings reports from the likes of General Electric (GE 31.35 -0.05), Yahoo (YHOO 56.05 +7.70), and Genentech (DNA 112.38 +3.93), upward estimate revisions from the likes of Dell (DELL 35.57 +0.75) and Federal Express (FDX 73.97 -1.09), and generally strong same store sales reports, including upward guidance by numerous retailers... Additionally, the Initial Claims report at 328K (consensus 340K) demonstrated continued stabilization in the lay-offs picture, while the Wholesale Inventories report at 1.2% (consensus 0.3%) was the strongest in 4 years... The inventory to sales ratio dipped to a record low of 1.17, arguing for stronger inventory rebuilding and an added boost to 2004 production and economic growth...
Nevertheless, the grilling of national security adviser Condoleezza Rice by the independent commission investigating the September 11 attacks brought attention to geopolitical concerns and threats, stealing some of the market's thunder through the morning, just like news of a CIA warnings of possible terror attacks in Paris tonight pressured the market in the afternoon... Accordingly, the major averages spent the session in a steady drift lower, with the major averages finishing below last Friday's closing levels as participants sold on the news... Among the laggards of note were the retail, real estate operations, gold, aluminum, homebuilding, drug retailing, transportation, and non-metal mining groups...
Leaders to the upside of note included the internet, computer services, security systems, storage, insurance, oil & gas services, and healthcare services groups... Elsewhere, the bond market took a hit, with the 10-year note closing down 11/32, bringing its yield up to 4.20%...NYSE Adv/Dec 1198/2043, Nasdaq Adv/Dec 1470/1696
12:04PM Mortgage rates up for third straight week : Freddie Mac reports that mortgage rates popped for the 3rd week in a row, with the average 30-year jumping to 5.79% from 5.52% the previous week. Fifteen-year fixed saw 5.12% from 4.84% and one-year adjustables hit 3.65% from 3.46%.
11:01AM Power Integrations strength attributed to Pacific Growth comments, Samsung guidance (POWI) 32.29 +2.59: --Update-- Stock posting a 9% gain today after Pacific Growth raised estimates based on firm's view that Samsung, POWI's largest customer, is rebounding strongly after an inventory correction in the DecQ, as well as continued adoption of the co's integrated chipsets in the non-cell phone market. Firm reiterates its Over Weight rating after Nokia reported that global mobile phone volume growth was estimated to have been in excess of 25% in the Q1, while Nokia volumes grew by only 19% due to certain gaps in its product portfolio, mainly in the mid range. This is consistent with our observation that Samsung is doing well in the cell phone market and may have grown its market share significantly - a positive for POWI as firm believes the co has little exposure to Nokia, but with significant exposure to Samsung.
9:22AM Skyworks partners with XING unit (SWKS) 12.14: Qiao Xing Universal Telephone (XING) announces that CECT, its subsidiary engaging in mobile phones manufacturing and distribution, commences partnership with Skyworks to incorporate Skyworks highly integrated GSM/GPRS cellular system solution for launching several next generation handsets geared for today's diverse consumer.
8:08AM Parametric guides MarQ higher (PMTC) 4.85: Co expects Q2 (Mar) results to exceed the co's earlier guidance. Co now expects revs of $164 mln vs prior guidance of $150 mln and consensus of $157 mln. CO expects approximately breakeven earnings per share on a GAAP basis, which includes net charges of about $11 mln. The co had previously guided to a net loss per share of $(0.09)-$(0.05).
8:05AM RF Micro Device reaffirms Q4 revs in line (RFMD) 8.71: Company confirmed March 2004 quarterly revenue guidance in an interview Wed afternoon with Reuters. Co anticipates March quarterly revenue will be at high end of range of approx $152-163 mln (originally provided in its Jan. 20), vs the Reuters Research consensus of $160.9 mln... see Briefing.com note yesterday at 14:25.
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