Market Update: Stocks Edge Modestly Higher at Midday
(Updated from 10:48 a.m. EDT)
Two of the three major indices were creeping higher at midday as investors found few reasons to make big moves in today's market.
With a shortage of earnings and economic releases this week, Wall Street is hanging on forward guidance from bellwether companies -- and on hopes for a recovery in the second half of this year. Earlier this morning,
Cypress Semiconductor
(CY) - Get Report
warned about its second quarter. In a separate note on the chip sector,
Goldman Sachs
cautioned about revenue declines.
"The market keeps saying that the second half of this year will get better," said Peter Boockvar, equity strategist at
Miller Tabak
. "But because of a lack of announcements this week, the market will be volatile. Once we get more data next week, things will hopefully stabilize." On tap to be released next week: the
Consumer Price Index, the
Producer Price Index, and the monthly retail sales report.
At noon EDT, the
Dow Jones Industrial Average was down 8.33 points, or 0.1%, to 10,982.08. Many of the stocks in the 30 member Dow were lower, including
Intel
(INTC) - Get Report
. The chip giant was lately off 1.8% to $28.21.
The broader-market
S&P 500 was up 0.06 points to 1260.73. The
Nasdaq Composite, weighted in technology stocks, was also edging lower, up 1.4 points to 2150.8. In recent trading,
Dell
(DELL) - Get Report
climbed 2.4% to $25.21, while
Cisco
(CSCO) - Get Report
gained 3% to $19.42.
Cypress Semiconductor was shrugging off this morning's announcement, likely because it did not mention anything about its performance in the second half of the year and investors have already discounted weakness in the second quarter. It was lately up 1.9% to $22. The
Philadelphia Stock Exchange Semiconductor Index
, however, was off 1.6%after Goldman's bearish comments on the sector.
In its note, Goldman said that warnings last week from
Altera
(ALTR) - Get Report
and
Integrated Device Technologies
(IDTI) - Get Report
, plus weak April revenue data for the industry, "imply a downward bias for semiconductor news flow and stock prices near term." Altera was off 0.9%, while IDT was up 0.2%.
With a
Federal Reserve meeting on the horizon, investors may be partly encouraged today by comments from
Alan Greenspan. Boosting the case for more rate cuts, the Fed chief said in a speech to the
International Monetary Conference
in Singapore that inflation is "not a significant problem" for the U.S. economy.
The Fed has already dropped short-term rates five times this year, slashing the benchmark rate to 4% from 6.5%. The policy-making body next meets to determine the direction of interest rates on June 26 and 27, and the
fed fund futures market-- a good proxy for the future direction of interest rates -- is pricing in greater than 90% odds there will be another quarter-point cut.
Bonds prices were falling -- and yields rising. The short end of the market reflects expectations about the future direction of interest rates. The long end of the market gives a good read on the inflation outlook. And investors were moving out of some of their riskier positions in technology and into safer havens. Drug, tobacco, and consumer staples were inching higher.
Last Thursday and Friday, the Nasdaq Composite jumped 3%, while the blue-chip Dow and the broader market S&P 500 each rose 1%. Still, all three indices closed the week lower. The Dow dipped 0.1%, the S&P 500 lost 1.4% and the Nasdaq shed 4.5% as investors geared up for pre-announcement season, when companies warn if profits or revenues will fall short of expectations.
Back to top