Kemble... possible reason why we may have seen DELL drop in the past 2 days....a need for cash in liquid stocks (see bolded below). Article from The Street.com:
Market Roundup: Queasy Market Lurches
Lower, Dow Notwithstanding
By Aaron L. Task
Senior Writer
10/6/98 5:50 PM ET
A day notable mainly for its failed rallies left Wall Street all
mixed up and feeling a bit nauseated.
Unlikely heroes in unglamorous industries such as oil,
retailing and transportation notched modest gains to help
blue-chips overcome a midday malaise inspired by the
retreating technology stocks. But it was a down day for all but
the Dow Jones Industrial Average as the majority of stocks
tumbled and bellwether tech stocks failed to sustain an early
bounce from yesterday's heavy losses.
The bond market, meanwhile, snapped its five-day streak of
record-setting advances as some semblance of optimism
about the international global crises emerged. The price of the
30-year Treasury bond closed well off its morning lows but
down 1/32 to 112 9/32, nudging its yield up to 4.73%.
The Nasdaq Composite Index jumped as high as 1577.87 in
its initial move as investors sought to find "bargains" in the
technology mainstays so battered and deep fried the prior day.
But with Microsoft (MSFT:Nasdaq) spearheading a nosedive,
the tech-bedraggled index soon tumbled into negative territory
and did not bottom until it reached 1500.60. The Comp
recovered to climb within 10 points of break-even but
shuddered again to close off 25.80, or 1.7%, to 1510.89.
The Dow industrials closed up 16.74, or 0.2%, to 7742.98 after
a whipsaw session. The index reached its apex of 7880.98 in
the first 45 minutes of the session and then tumbled as low as
7683.51 around 2:15 p.m. EDT before mounting an ultimately
flawed recovery.
The Dow's leading gainer was Alcoa (AA:NYSE), which rose
6.3% on an upside earnings surprise to add 17.25 points to
the index. Additionally, bullish same-store sales figures gave a
lift to Wal-Mart (WMT:NYSE) and helped boost the majority of
its peers. The American Stock Exchange Retailing Index
climbed 3%.
The S&P 500 shed 3.97, or 0.4%, to 984.59 after rising as high
as 1008.77 and then dipping as low as 974.81. The Russell
2000 lost 4.25, or 1.3%, to 332.55 after once trading as high as
340.85.
"Today was up solid, then we sold off and finished slightly to
the plus side but not exactly with a lot of momentum," said Bob
Basel, director of listed trading at Salomon Smith Barney. "I
think it's going to be an indecisive week going into a huge
week next week which will be laden with earnings news. If
you're looking for direction, next week will be much more
important."
Basel noted the global situation was "pretty solid" today but
that was counteracted by the ongoing weakness in the tech
sector. "You look at the Nasdaq down 25 after being down 75
yesterday and it's certainly got people nervous," he said. "For
every piece of good news, there's an equal piece of bad news."
In New York Stock Exchange trading, 845.4 million shares
changed hands while the breadth -- once solidly on the
positive side -- favored declining stocks 1,683 to 1,308. In
Nasdaq Stock Market trading, 891.4 million shares changed
hands while losers bested gainers 2,491 to 1,577. New
52-week lows whipped new highs 325 to 74 on the Big Board
and by 525 to 5 in over-the-counter trading.
Big tech gets rocked
On the tech side of the ledger, Microsoft closed off 3.6%,
paving the way for declines of 4.2% for Dell (DELL:Nasdaq),
5.3% for America Online (AOL:NYSE) and 2.2% for Lucent
(LU:NYSE). Rather than bouncing from its harrowing decline
yesterday, Cisco (CSCO:Nasdaq) shed another 4.5%.
The Philadelphia Stock Exchange Semiconductor Index
closed up 1.8% thanks mainly to a big gain by Motorola
(MOT:NYSE), but other tech proxies weren't so fortunate. The
Nasdaq 100 slid 1.9%, the Morgan Stanley High-Tech 35
surrendered 1.6% and the American Stock Exchange
Inter@ctive Week Internet Index dipped 2.7%.
"You're seeing a major need for cash from both hedge funds
having to meet margin calls and aggressive growth mutual
funds having to meet redemptions," said Eric Gustafson, a
portfolio manager at Stein Roe & Farnham. "They are finally
turning toward the stocks of last resort -- the Ciscos, the
Lucents, and the Microsofts. These are the most liquid names,
so that's where they're turning to."
Additionally, "there are legitimate concerns about the
macroeconomic environment," Gustafson added. "Put those
two together and people are selling indiscriminately."
The fund manager said he is seeing signs of "panic" among
investors. "Some commentator said there haven't been many
bids wanted, [but] I'm seeing them," Gustafson said. "I'm
seeing guys that just want to get out of names. That will set the
bottom. But October always is the worst month and we're only
five days in. So we've got some fun ahead."
Cash as a buffer against pounding
The manager, who oversees about $2.2 billion of assets in the
Stein Roe Growth Stock fund and the Young Investors fund,
maintains long positions in the tech bellwethers mentioned
above while increasing his cash holding to about 10% of
assets.
"I'm still getting pounded, but at least I've got a buffer," he said.
"Cash feels pretty good right now. I wish I had more, but I'm not
paid to have cash. I think there's a lot on the sidelines waiting
for a catalyst to let us buy stocks again."
In the past two weeks he has been "selectively buying" names
such as Walgreen (WAG:NYSE), Johnson & Johnson
(JNJ:NYSE), American Home Products (AHP:NYSE) and -- "for
the first time in two years" -- Gillette (G:NYSE).
One reason for his confidence is a belief the Federal Reserve
will finally overcome the scars brought on by rampant inflation
in the 1970s and begin to "aggressively lower rates to combat
a deflationary environment." The fund manager expects
another ease before the Federal Open Market Committee's
November meeting, as part of coordinated rate cuts with other
central banks. "It's happening," he said. "Spain [eased] today,
Italy is going to. They will do it because they have to do it. The
world is crying out for liquidity. If they don't, it's going to be a
dark, dark turn of the century."
Among other indices, the Dow Jones Transportation Average
rose 3.86, or 0.2%, to 2533.46; the Dow Jones Utility Average
lost 1.35, or 0.4%, to 317.48; and the American Stock
Exchange Composite Index shed 0.12 to 593.09.
Elsewhere in North American equities, the Toronto Stock
Exchange 300 rose 61.97, or 1.2%, to 5398.12 and the
Mexican Stock Exchange IPC Index tacked on 6.84 to
3434.82. |
