Can't wait for that employment report. Gonna help give an idea which way the Fed might go in November. Or so the hope of countless traders went ahead of this morning's release of the September employment report.
Yeah, right.
| Major Indices | | INDEX | CHANGE | % | VALUE | | Dow |   94.35 | 0.90% | 10,631.40 | | S&P 500 | 14.39 | 1.09% | 1332.03 | | Nasdaq | 6.31 | 0.22% | 2867.01 | | Russell 2000 |  -1.63 | -0.38% | 426.48 | | TSC Internet | -0.50 | -0.07% | 722.72 | | BOND | CHANGE | PRICE | YIELD | | 30-Year Treasury | -7/32 | 99 | 6.190% | | Market data as of: 1:27 PM EDT, Fri Oct 8 1999 | |
Traders of both the bond and stock variety -- seeking clarity from this morning's jobs data -- were left scratching their heads about which way the
Federal Open Market Committee will head in November, after the release of the Floyd-corrupted (that's the Hurricane, not the barber) September jobs report.
"The number was a little bit confusing this morning," said Scott Curtis, senior equity trader at
Brown Brothers Harriman, of the employment report. The confusion stemmed from a drop in nonfarm payrolls -- which was good for a market fearful of rate hikes -- giving hope to the economy cooling. However, wage gains troubled more than a few people.
The effect on the 30-year Treasury bond early this afternoon was negligible. As for stocks, major market averages, after a brief sell off, stormed back into positive territory, led by the
Dow Jones Industrial Average and the
S&P 500. Meanwhile, certain sectors were turning in performances ranging from "ugly" to "handsome."
On the homely side were semiconductor and computer makers, while retail, drug and airline stocks looked lovely.
News on the earnings front was also moving select stocks, among the notables
Xerox (XRX Quote), which was getting hammered after issuing a profit warning before the open, sending its stock down 23.9%. And then there was the
Hi/fn (HIFN Quote) debacle. Hi/fn was off a whopping 43.2%.
The Dow was up 94, or 0.9%, to 10,631, shaking off some earlier weakness.
Johnson & Johnson (JNJ Quote) provided the biggest boost to the blue-chip gauge, accounting for 19.63 points of the Dow's gain. Conversely, reflecting today's weakness in techs,
IBM (IBM Quote) and
Hewlett-Packard (HWP Quote) were both suffering noticeably among Dow components.
The S&P 500 was up 14, or 1.1%, to 1332. The
Nasdaq Composite Index was up 6, or 0.2%, to 2867.
The
Philadelphia Stock Exchange Semiconductor Index was off 3.1%, while the
Philadelphia Stock Exchange Computer Box Maker Index was down 2.9%.
The small-cap
Russell 2000 was off 2, or 0.4%, to 426.
TheStreet.com Internet Sector index was down half a point to 723, taking a break from its recent breathtaking rise. Going into today, from its recent low set in early August, the DOT has soared roughly 50%.
In the Treasury market, the 30-year bond was lately down 7/32 to 99, yielding 6.19%. (For more on the fixed-income market, see today's early
Bond Focus.) The bond market is closing at 2 p.m. EDT today and will be closed Monday in observance of Columbus Day.
Stinks to be a bond trader, huh?
As for the aforementioned employment report, the
Labor Department reported
nonfarm payrolls fell 8,000 in September, a mile away from the growth of 218,000 new jobs predicted by economists in a
Reuters poll. The jobless rate remained at 4.2% in September.
However, hourly wages in the month gained 0.5%, two-tenths of a point higher than expected. Average hourly earnings rose 7 cents to $13.37. The wage gains troubled both the bond and stock market which is already highly fearful of inflation and afraid of more Fed interest rate hikes.
Mario DeRose, fixed-income strategist at
Edward Jones, said the bond market was scratching its head over the jobs report and "not sure what to make of it."
Labor said nonfarm payrolls would have risen 50,000
sans Hurricane Floyd.
"We're lucky we have another employment report" before the next Fed meeting, DeRose said.
The data wasn't a "clean enough number to go out and start buying," DeRose said of bond investors' attitudes to the report. The strategist said the employment number was supposed to set the tone for the month, "and it's not going to do it." DeRose said it's going to be difficult for the bond market to sustain a rally.
Speaking of inflation, the rise in oil prices this year has also fanned some analysts' fears of inflationary pressure. But while oil prices have really gushed this year, today it's taking a rude plunge. Crude oil futures were swooning and that drag was helping tackle oil service and oil stocks. The
Philadelphia Stock Exchange Oil Service Index was down 3.4%, while the
Chicago Board Options Exchange Oil Index was off 2.3%.
Conversely, the tumble in oil was aiding airline stocks along with an upgrade of a couple of airlines by
Donaldson Lufkin & Jenrette. Airline issues were bumping up the
Dow Jones Transportation Average, which was up 1.2%. DLJ upgraded
AMR (AMR Quote) and
Northwest Airlines (NWAC Quote). The
American Stock Exchange Airline Index was up 2.1%.
Drug and retail stocks were posting large gains. The
American Stock Exchange Pharmaceutical Index was up 3.7%, while the
S&P Retail Index was up 3.1%.
Today is also the one-year anniversary of last year's market's bottom. (As a quick aside, remember that episode of
The Flintstones when they sang
Happy Anniversary over and over? It's a classic.)
While major market gauges have snapped back, breadth was negative. On the
New York Stock Exchange, decliners were beating advancers 1,447 to 1,305 on 571 million shares. On the
Nasdaq Stock Market, losers were leading winners 1,835 to 1,703 on 637 million shares.
On the NYSE, 92 issues had set new 52-week lows while 39 had touched new highs. On the Nasdaq, 78 issues had set new 52-week lows while new highs totaled 65.
Meanwhile, among other indices, the
Dow Jones Utility Average was up 0.8% and the
American Stock Exchange Composite Index was down 0.5%.
On the Big Board, Xerox was most active with 34.8 million shares changing hands.
On the Nasdaq,
Global Crossing (GBLX Quote) was most active with 25.8 million shares changing hands. It was up 8.5%.
Friday's Midday Watchlist
By Tara Murphy
Staff Reporter (
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. )
Mergers, acquisitions and joint ventures
DuPont's (DD Quote) DuPont Pharmaceuticals division said it bought the global marketing rights and patent for a chemical compound called
Definity through its purchase of
ImaRx Pharmaceuticals' outstanding shares. DuPont plans to sell Definity as the first ultrasound contrast agent for heart, liver and kidney imaging in the United States. Shares of DuPont were up 1 13/16 to 67 3/16.
Warburg initiated coverage of
DuPont (DD Quote) with a hold rating.
EMC (EMC Quote) said its merger with
Data General (DGN Quote) should close shortly since it received regulatory and shareholder approval. EMC was slipping 1 3/4 to 71 7/8, while Data General was unchanged at 22 3/8.
KPN Telecom announced its plans to team up with
Oracle (ORCL Quote) to sell business software packages on the Internet to small or mid-sized businesses in the Benelux. Oracle shares were off 1/16 to 44 5/8.
Volvo (VOLVY Quote) is buying a 5% stake in
Mitsubishi Motors of Japan and forming a strategic truck and bus alliance. Volvo was stumbling 1/4 to 28 1/16.
Earnings/revenue reports and previews
Analogic (ALOG Quote) was falling 1 to 30 after it posted fourth-quarter EPS of 30 cents, greatly missing the single-analyst estimate of 45 cents and the year-ago 56 cents.
Consolidated Papers (CDP Quote) was climbing 2 1/16, or 7.3%, to 30 posted third-quarter earnings of 21 cents a share, well ahead of the 10-analyst estimate of 15 cents and above the year-ago 19 cents.
Ericsson's (ERICY Quote) new handset models would lead to stronger fourth-quarter results compared with those in the second quarter and boost earnings in 2000, according to a
Reuters report. Ericsson shares were declining 1 1/2 to 33 5/8.
HA-LO Industries (HMK Quote) was tumbling 11/16, or 11.5%, to 5 1/4 after it said that it expects to post a third-quarter loss between 3 to 5 cents, greatly below the nine-analyst estimate of a 9-cent profit, and the year-ago 17-cent gain.
Hi/fn, whose stock got crushed yesterday, said it expects to report fourth-quarter earnings above the five-analyst estimate of 37 cents. Hi/fn said, after its shares were halted on the
Nasdaq Stock Market, that after a 30% price decline, two major customers had sliced their specialty semiconductor orders for the fourth quarter.
SG Cowen and
BancBoston Robertson Stephens cut their ratings on the shares to neutral from buy and long-term attractive from buy, respectively. Shares of Hi/fn were plummeting 32 1/4, or 43.5%, to 41 13/16.
Landmark Systems (LDMK Quote) was slumping 2 1/4, or 25.3%, to 6 3/4 after it said it expects to post third-quarter earnings between 1 and 2 cents per share, greatly below the two-analyst estimate of 16 cents a share.
SLI (SLI Quote) was off 9/16 to 10 7/8 after it warned it expects third-quarter earnings to come in between 20 cents to 25 cents a share, below the seven-analyst estimate of 35 cents. For the full year, before restructuring and other charges, the company expects to post earnings of between $1.36 and $1.46 a share, below the seven-analyst estimate of $1.72.
Retailers' September same-store sales were up, with discount chains in the lead, according to
The Wall Street Journal. The newspaper reported that some analysts plan to up their earnings estimates for
Wal-Mart (WMT Quote),
Dayton Hudson (DH Quote) and
Costco (COST Quote) as a result of the strong sales. Shares of Dayton Hudson were hopping 2 5/8 to 67 5/8 and Wal-Mart was advancing 1/16 to 15 15/16.
Xerox
(XRX Quote) was sinking 10 7/8, or 25.4%, to 31 13/16 after it warned that it expects to post essentially flat revenue for the third quarter and to see about a 10% to 12% slump in earnings compared with the year-ago 53 cents a share. The 13-analyst consensus estimate called for the company to earn 58 cents a share in the quarter. Xerox blamed weaker revenue in combination with an unfavorable product mix and heightened competitive pressures.
Prudential Securities lowered its rating on Xerox to accumulate from buy, while cutting its fiscal 1999 and 2000 earnings estimates to $2.42 from $2.57 a share and to $2.70 from $2.85 per share, respectively.
PaineWebber also cut its rating on Xerox to neutral from buy, while
Goldman Sachsremoved the stock from its recommended list and rated it a market perform.
York Research (YORK Quote) was off 1/8 to 4 after it reported second-quarter earnings of 3 cents a share, beating the single-analyst estimate of 1 cent, but down from the year-ago 14 cents.
Offerings and stock actions
J.P. Morgan, Goldman Sachs and
Salomon Smith Barney priced a 14 million-share offering for
AES (AES Quote) at $57.1875 a share. Shares of AES were tumbling 11/16 to 56 1/2.
Aetna (AET Quote) was slipping 7/16 to 52 1/4 after it announced it plans to set a $1 billion share-repurchasing plan. Separately, another lawsuit against Aetna was filed yesterday in Mississippi federal court, claiming that the HMO denied participants care.
Genentech (DNA Quote) said
Roche Holdings plans to sell 20 million shares of Genentech stock in an underwritten public offering, which will represent 15.6% of the outstanding common stock of Genentech. The company also said its board approved a 2-for-1 stock split. In the wake of the planned offering, Roche's economic and voting ownership of Genentech will be trimmed to about 65%. In conjunction with the offering, Roche also plans to issue U.S. dollar-denominated bonds exchangeable with Roche for up to about 5.5 million shares of Genentech stock owned by Roche. Shares of Genetech were plummeting 19 13/16, or 11.4%, to 153.
Credit Suisse First Boston priced
Interwoven's (IWOV Quote) 3.2-million-share IPO above-range at $17 a share. Shares of Interwoven were soaring 24, or 141%, to 41 1/4.
Donaldson Lufkin & Jenrette priced
Jupiter Communications' (JPTR Quote) 3.1 million-share IPO above-range at $21. Jupiter Communications' shares were leaping 20 1/16, or 95%, to 41 1/16.
K-Swiss (KSWS Quote) set a $25 million share-repurchasing plan. K-Swiss was up 1/4 to 17 5/16
Bear Stearns priced
TriZetto Group's (TZIX Quote) 4.2-million-share IPO at $9, the low end of the estimated $9 to $10 range. TriZetto shares had not begun traded by midday.
Analyst actions
PaineWebber initiated coverage of
Automatic Data Processing (AUD Quote) and
Tanning Technology (TANN Quote) with buy ratings. Automatic Data Processing shares were up 3/4 to 44 15/16, while Tanning shares were adding 1 3/4, or 6.4%, to 29 1/4.
Donaldson Lufkin & Jenrette raised its ratings on
AMR (AMR Quote) and
Northwest (NWAC Quote) to outperform from marketperform. AMR shares were gaining 2 1/2 to 63 7/8, while Northwest was up 3/4 to 29 1/8.
Merrill Lynch initiated coverage of
Applied Micro Circuits (AMCC Quote) with near-term accumulate, long-term buy ratings. Shares of Applied Micro were down 10 7/8, or 14.4%, to 64 3/4.
Credit Suisse First Boston initiated coverage of
CD Radio (CDRD Quote) as a buy. Shares of CD Radio were bouncing 1 1/16 to 26 5/8.
Warburg Dillon Read rolled out coverage of
Cytec Industries (CYT Quote) with a buy rating. Cytec was skidding 2 3/4, or 9.8%, to 25 1/4.
Warburg Dillon Read raised its rating on
Dow Chemical (DOW Quote) to buy from a hold and set a price target of 130. Dow was popping 2 to 116 13/16.
Warburg initiated coverage of
Engelhard (EC Quote) with a strong buy rating. Engelhard was up 1/16 to 18 5/8.
PaineWebber upped its rating on
Ferrellgas (FGP Quote) to a buy from attractive. Ferrellgas was off 1/16 to 16 3/8.
Merrill Lynch added
Infinity Broadcasting (INF Quote) to its
Focus One list. Infinity was advancing 1 1/16 to 32 3/16.
PaineWebber started
Keane (KEA Quote) and
Perot Systems (PER Quote) with neutral ratings. Keane was sliding 9/16 to 21 11/16, while Perot shares were unchanged at 18 3/8.
Morgan Stanley raised its rating on
Kennametal (KMT Quote) to outperform from neutral. Shares of Kennametal were climbing 1 13/16, or 6.9%, to 27 7/8.
Deutsche Banc Alex. Brown lowered its rating on
Marten Transport (MRTN Quote) to neutral from buy. Marten Transport was unchanged at 11.
Morgan Stanley Dean Witter sliced its rating on
Merrill Lynch (MER Quote) and
TD Waterhouse (TWE Quote) to neutral from outperform. Morgan Stanley also downgraded
Charles Schwab (SCH Quote) to neutral from outperform. Shares of Merrill Lynch were sliding 1 1/16 to 68 15/16, while TD Waterhouse was also falling 9/16 to 12 15/16.
ING Barings rolled out coverage of
priceline.com (PCLN Quote) with a strong buy rating. Shares of priceline were bouncing 3 3/16 to 75 11/16.
Goldman Sachs upgraded shares of
Southern Peru Copper (PCU Quote) to market outperformer from market performer. Southern Peru was hopping 1 1/8, or 6.6%, to 18.
Merrill Lynch started coverage of
TranSwitch (TXCC Quote) with a near-term and long-term accumulate. TranSwitch shares were declining 5 1/2, or 9.4%, to 52 1/2.
Goldman Sachs upped its rating of
Tredegar (TG Quote) to market outperformer from market performer. Shares of Tredegar were up 1/2 to 22 3/4.
Goldman Sachs raised its rating on
Plains All American (PAA Quote) to its recommended list. Shares of Plains were unchanged at 18 1/2.
Lehman Brothers began coverage of
PMC-Sierra (PMCS Quote) with a buy rating. PMC-Sierra was down 7 13/16, or 7.8%, to 92 1/8.
DLJ began coverage of
Starwood (HOT Quote) with a market perform rating and sliced its rating on
Marriott (MAR Quote) to market perform. Shares of Starwood were up 1 to 21 1/16, while Marriott was sinking 1 1/14 to 30 11/16.
Salomon Smith Barney sliced its rating on
Vitesse Semiconductor (VTSS Quote) to outperform from buy, in the wake of Hi/fn's announcement of fiscal 2000 first-quarter earnings woes. Hi/fn supplies components to Lucent, which gives Vitesse 20% of its business. Vitesse was sliding 6 15/16, or 85, to 79 1/4.
Miscellany
Ford (F Quote) and the
UAW are still in talks to reach an accord before tonight's 11:59 p.m. strike deadline, the
Journal reported. According to the newspaper, negotiations have been hindered by Ford's desire to spin off its
Visteon parts division. Ford shares were up 9/16 to 51 15/16.
Mattel (MAT Quote) CEO Jill Barad told the company's board that she did not fully understand what was wrong at the company's
Learning Co. division, but assured the board that she would produce a full accounting in the near future, the
Journal reported. Mattel was off 5/16 to 12.
Wendy's (WEN Quote) said it plans to shut down 7 restaurants in the U.K. as a result of high real estate and operating costs. The company said the closures would not have a negative impact on forth-quarter earnings. Shares of Wendy's were up 1/2 to 26 7/16.
