I predicted LGND would lead Biotechs higher in 1998 and last night's Dow Jones summary looked good. They noted the rally of selected small caps and thought that those that showed earnings and were not affected by Asia would do well. They also noted that successful investors would have to target selected companies and not an entire sector. Ligand was the only Biotech mentioned and was one of the two small caps listed with a gain:
Small-Cap, Nasdaq Stks Rally As Asian
Fears Subside
Dow Jones Newswires
NEW YORK -- Small-capitalization and Nasdaq stocks rallied Friday
amid dissipating fears that Asian currency problems will cut deeply into
domestic companies' earnings.
Despite a disappointing earnings forecast from telecommunications giant
QualComm, which cited sales losses in South Korea, all the major sectors
and indexes saw gains.
QualComm closed down 8 1/2, or 15%, at 46 1/8.
Richard Meyer, managing director of equity trading at JW Charles
Securities, said the market is seeing an upward bias as Asian concerns
weaken and with them the likelihood of an interest rate hike by the Federal
Reserve Board.
"This gives traders one less concern," Meyers said.
The Nasdaq Composite Index gained 17.43, or 1.04%, to 1694.33. The
Russell 2000 index of small-capitalization stocks closed up 1.43, or
0.32%, to 445.49.
The Nasdaq index of the 100-largest nonfinancial stocks rose 19.46, or
1.75%, to 1134.32.
The Nasdaq computer index gained 10.85, or 1.53%, to 718.92.
The Dow Jones Industrial Average closed up 72.24, or 0.89%, at
8189.49. The New York Stock Exchange Composite Index climbed
3.34, or 0.64%, to 526.31.
On the Nasdaq, advancers led decliners, 1,861 to 1,445, with 987
unchanged, on national market volume of 691.6 million and overall volume
of 751.9 million.
Investors appear to be differentiating between the losses of one company
and the impact those losses may have on that company's overall sector,
said JW Charles Securities' Meyers.
Consequently, entire sectors won't be punished for the sins of one
company, he said.
"I think 1998 is going to be a market of more selective stock buying,"
Meyers said. "People will focus on one company and that company's
exposure to foreign markets rather than on a whole group."
Meyers cited QualComm's poor earnings projection - and the
announcement's lack of widespread market impact - as evidence of his
theory.
Late last year, when Oracle announced poorer than expected earnings and
blamed the Asian economic crisis, the entire market suffered on fears that
all companies were bound to suffer the same fate.
But with many companies subsequently reporting solid earnings in spite of
the Asian turbulence, Meyers feels traders will remain more focuses on
individual stocks and shy away from generalizations.
IFR Systems shares gained 25%, or 4 1/4%, to 21, on news the company
doubled its size with the purchase of test and measurement-equipment
units from General Electric PLC. IFR announced it bought GE's Marconi
Instruments Ltd. of Hertfordshire, England, and Marconi Instruments Inc.
of Dallas for about $107 million in cash. The purchase doubles revenue at
IFR, which makes electronic test instruments used in communications,
avionics and general test measurement applications.
Ligand Pharmaceuticals rose 1 5/8, or 14%, to 12 7/8 after announcing a
fourth-quarter operating loss of 9 cents a share compared to losses of 38
cents a share a year ago.
SystemSoft fell 1 7/8, or 36%, to 3 5/16, after reporting at the close of
Thursday's session that the software company's fourth-quarter losses are
expected at 68 cents to 73 cents a share. The losses are related to charges
of between $12 and $14 million related to royalty obligations and costs for
previously acquired technology. Analysts had predicted earnings of 5 cents
a share.
Loehmann's shares fell 1/8, or 3%, to 4 after the retailer estimated
fourth-quarter losses at 40 cents a share compared to year-ago pro forma
earnings of 14 cents. The losses stem primarily from $9 million in charges
for closing 10 stores.
V-One shares slid 1/2, or 14%, to 3, after the company late Thursday
reported less than anticipated fourth-quarter earnings. The company,
which makes Internet security software, said it posted a loss of 41 cents a
share, compared with a loss of 11 cents a share in the year-earlier period.
Analysts' consensus estimate had put the company's earnings at 2 cents a
share. Industry watchers said a revenue shortfall and a disappointing gross
margin contributed to the losses. One analyst blamed V-One's
disappointing performance on the lack of an effective means to distribute
its security software to customers.
Intelligroup shares fell 3 3/8, or 17%, to 16 1/4, after the
information-technology services company announced after the close of
Thursday's session that Bob Olanoff, the company's chief financial officer
had resigned to accept a position with a software company. |
