Semiconductors continued to fuel the
Nasdaq Composite Index, which was climbing 16, or 0.4%, to 4006. But the
Dow was still floundering--down 102, or 0.97%, to 10,455, with weakness coming from big blue chip industrials.
Still feeling the burn from yesterday's second-quarter profit warning,
Honeywell(HON), which faced downgrades from both
Prudential and
Banc of America this morning, was losing 8.8%, while shares of
United Technologies(UTX) were shedding 3.7%.
"I think that part of it's Honeywell, but if economic growth slows, it's going to hit the industrials and cyclicals the hardest," said Brian Gilmartin, portfolio manager at
Trinity Asset Management, noting that they have earnings and revenues tied to the business cycle.
The
Morgan Stanley Cyclical Index , which includes both Honeywell and United Technologies, was off 7.12, or 1.4%, to 470.18
The
S&P 500 slipped further into the red, down 14.30, or 0.9%, to 1471.78. Even the
Russell 2000, which was higher earlier in the session, had succumbed to the slide, falling 2.04, or 0.3%, to 520.81.
Semiconductors were flying, with the
Philadelphia Stock Exchange Semiconductor Index, climbing 21.3, or 1.7%, to 1256.1.
Micron(MU), which will report earnings on Thursday, rocketed to an all-time high. The shares were up 4 1/2, or 5.5%, to 86.
"Next quarter will be even better because that's when the PC component ordering is the strongest," Gilmartin said. "I expect this quarter to be strong for Micron, but September's conference call should be huge."
Broadcom(BRCM) was leading gains on the Nasdaq after Standard & Poor's said last night that it will add the stock to the S&P 500 index. Broadcom will replace telecommunications firm
GTE(GTE). Broadcom was bouncing 17 13/16, or 12.2%, to 165 3/8.
"After a nice breakout on the Nasdaq yesterday, we're looking for sustainability on yesterday's rally," said Bryan Piskorowski, market analyst at
Prudential Securities.
"In the last 3-4 weeks the volume and conviction have not really been there. Volume was all right yesterday but not the kind of volume you want to see on a breakout like that," Piskorowski said.
"The Old Economy has had some problems. Consumer multinationals have had some problems. We've just been sort of hopscotching on these pre-announcements," he said.
Nobody on Wall Street wants to be left out of a summer rally in tech, and if optimism over interest rates or corporate earnings continues, the market could see more buying today. Summer starts tonight, after all.
Of course, if the market does continue to rally into the
Federal Reserve's June 28 meeting, it may have to pull back afterwards as it looks ahead to the Fed's next get-together. An overwhelming majority of the market believes there won't be any new rate hikes at this next meeting, but there could certainly be more this year. Many market watchers expect stocks will continue to bounce around until investors are really certain the Fed is through raising rates.
"We'll probably see a run up into this meeting. Then, if they don't raise the rates, you'll see a really powerful run up and then it will trail off for a while," said Paul Rich, a trader at
BT Brokerage.
Wall Street will be keeping a close eye on
Oracle(ORCL) today. The software giant is set to report its fourth quarter earnings after the market closes. Lately, Oracle shares were off 3/16 to 85 3/4.
So far today, some major merger news has been announced as well as a few negative pre-announcements.
A much anticipated merger between Canada's
Seagram(VO), France's
Vivendi(EX) and Vivendi's cable unit
Canal Plus(AN) was finalized, which will create the world's second largest media conglomerate behind AOL-Time Warner. Seagram's was slipping 6, or 9.3%, to 58 on the news.
And
Publicis(PUBP) of France has agreed to acquire London-based advertising group
Saatchi & Saatchi(SSA), in a stock deal valued at about $1.92 billion, creating the world's fifth-largest advertising company. Saatchi & Saatchi was skidding 1 9/16 to 31 1/2.
Things weren't looking up for electronic components maker
Thomas & Betts(TNB) or Internet healthcare company
PlanetRX.com(PLRX), both of which announced earnings warnings. Thomas & Betts lost 7 9/16, or 29%, to 18 7/16, while PlanetRX.com stumbled 3/8, or 18.7%, to 1 5/8.
Finally, this week's only real economic data was reported at 8:30 a.m. EDT, when the April trade deficit was reported as $30.44 billion versus the
Reuters consensus estimates of $20.9 billion and narrower than the March deficit of $30.61 billion. The trade deficit is not usually a big market-mover and today's number was no exception.
BT Brokerage's Rich said he didn't expect the data to have any real impact on the market or even shake confidence in the strength of the U.S. dollar.
"There is, overall, incredible faith in the dollar. Any short-term fluctuations we see won't probably hurt any sentiment. Its going to cool, but it will just be a short-term effect. Nothing more," he said.
Market Internals
Breadth was negative on both the NYSE and the Nasdaq on moderate volume.
New York Stock Exchange
: 1,002 advancers, 1,696 decliners, 497 million shares. 56 new 52-week highs, 44 new lows.
Nasdaq Stock Market
: 1,660 advancers, 2,004 decliners, 851 million shares. 53 new highs, 60 new lows.
Back to top Most Active Stocks
NYSE Most Actives Honeywell (HON): 13 million shares. AT&T (T): 10 million shares. Compaq (CPQ): 10 million shares.
Nasdaq Most Actives JDS Uniphase (JDSU): 25 million shares. Cisco (CSCO): 18 million shares. Intel (INTC): 16 million shares.
Back to top Bonds/Economy
Long-dated Treasuries are rising in price, but short-dated ones are stagnant. Two upcoming events, both supply-related, are at work.
The Treasury Department is slated to announce the details of its next buyback of Treasury securities tomorrow. Like previous buybacks, it will probably target long-maturity instruments, which carry the highest interest rates. Shrinking supply of these instruments as a result of the buybacks has driven their prices up relative to short-term instruments.
Meanwhile, keeping short-dated paper under pressure, the Treasury Department will also announce the details of its next monthly two-year note auction tomorrow. The increasing supply of short-dated paper keeps its price from rising.
The benchmark 10-year Treasury note lately was up 1/32 at 103 21/32, dropping its yield to 5.994%.
Back to top International
European markets moved higher on strength in tech and media stocks after the Nasdaq's rally on Monday and confirmation about the Saatchi & Saatchi deal.
The Paris
CAC was up 56.97, or 0.88%, to 6562.13, while Frankfurt's
Xetra Dax was up 36.77, or 0.51%, to 7235.57.
Across the channel, London's
FTSE, meanwhile, was 21.3 higher, or 0.33%, to 6511.5.
The euro was lately trading down at $0.9554.
Asian markets were mixed overnight.
Large-cap tech plays in Japan were all the rage again on Tuesday, thanks to the near 3.4% bounce in the Nasdaq overnight. A mildly optimistic June economic report also helped sentiment in Tokyo.
The
Nikkei 225 index rose 316.20 points, or 1.9%, to 16,907.55,
In currency trading, the dollar lost ground against the yen and fell to around 105.60 after the EPA said Japan's economy was one step closer to a self-sustaining recovery. It was recently higher at 105.87 yen.
Hong Kong's
Hang Seng index lost 180.73 points, or 1.1%, to 16,086.74 as bank and property shares got hit by profit taking
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