Today's Market: Tech Stocks Edge Up
(Updated from 9:47 a.m.)
Wall Street's appetite for stocks had cooled this morning following four days of gains on the major stock market averages. Tech stocks were flat at the open despite preopen strength in futures.
Blue-chips were also flat.
The news in techland was mixed.
Credit Suisse First Boston
issued a pessimistic note on
Intel
(INTC) - Get Report
but Internet stock
priceline.com
(PCLN)
got a major boost after two Hong Kong-based firms purchased a major stake.
The Dow was lately near unchanged, up 2 to 11,177; the
Nasdaq Composite Index was adding 15 points to 2249; and the broader market
S&P 500 was down 2 points to 1282.
Cheung Kong Holdings
and
Hutchison Whampoa
, both controlled by Hong Kong's wealthiest man, Li Ka-Shing, are purchasing 25 million shares of priceline.com from founder Jay Walker and his trust, the companies said last night. The additional shares will giving the companies a 30% stake in priceline.com and the right to two additional seats on its board.
Wall Street has been eager to snap up tech stocks at the slightest sign of good news in recent sessions.
"Investors love anything that says there's life after death," said Tom Gallagher, head of U.S. equity sales and trading at
CIBC World Markets
, referring to the priceline.com news. "Anything that says some of these stocks are going to survive."
priceline was one of the three biggest gainers in early trading, lately up 24% to $6.75.
Citrix Systems
(CTXS) - Get Report
was also gaining, up 18.3% to $28.16. The company said today it expects growth in the current quarter to be stronger than anticipated.
Stocks have bumped higher over the past four trading sessions as investors began to place bets that the corporate earnings slowdown has bottomed out.
Sun Microsystems
(SUNW) - Get Report
ushered in the
second-quarter confession season last week when it warned it would miss its second-quarter performance targets. But there has been little bad news since that announcement last Tuesday, and Wall Street seems to be thinking the rest of the confession season will be rosier.
Through yesterday, the Nasdaq was up 6.8% since last Wednesday's close; the Dow has inched up 2.7% and the S&P 500 has stepped up 2.8%.
Back in April, investors were betting that earnings would begin accelerating again in the third quarter of this year -- and they bid stocks up significantly. But a consensus now seems to be forming that a recovery won't happen until the fourth quarter of this year or early next year.
The broader market is expected to continue lag behind tech today on weakness in oil stocks. But if the Nasdaq rallies, the S&P 500 could follow. "The broader market is lagging behind because part of yesterday's rally was oil-related," Gallagher said.
"There's an anticipation that those stocks will be down today after the inventory levels came out yesterday. But if the Nasdaq rallies, the S&P goes with it," he said. Crude oil and gasoline prices were falling this morning after the
American Petroleum Institute
report showed higher-than-expected inventory levels. Crude oil inventories rose 3.4 million barrels, or 1%, vs. expectations they would fall by 2 million barrels.
Dog Days of Trading
Trading volume has been slow ahead of Intel's earnings update, scheduled for tomorrow. Intel is something of a proxy for other tech stocks, and Wall Street wants to hear what the company has to say about its earnings prospects for the rest of the year. Over the past three quarters, Intel has warned of revenue shortfalls in its midquarter reports.
This morning
Credit Suisse First Boston
analyst
Charles Glavin wrote in a research note that he expects Intel to shift its guidance in its update. Still, there seems to be growing confidence among analysts that the chip giant will leave its earnings targets
in place Thursday. Intel was lately up 0.4% to $29.87.
Some second-tier corporate names reported earnings and gave forward guidance after the close of regular trading last night and this morning, and the news was mixed. Chip-equipment maker
Atmi
(ATMI)
warned that its earnings for the second quarter, as well as earnings for the full year, would come in below current analyst expectations because of the slowdown in chip manufacturing. The stock was down 6.1% to $28.14 in early action this morning.
Food retailer
Albertson's
(ABS)
beat first-quarter earnings by a penny, with results of 46 cents a share. But the company said its second-quarter earnings forecast is now 43 cents a share, compared to the current consensus expectation of 52 cents a share. It was trading up 3.7% to $28.75 so far today. Cosmetics company
Avon
(AVP) - Get Report
, lately up 2.1% to $46.20, said this morning that it expects to meet its second-quarter earnings targets. And oil-refining company
Frontier Oil
(FTO)
preannounced to the upside Tuesday night, telling analysts it expects to post second-quarter earnings figures well above current estimates. Frontier Oil was trading up 16.3% to $16.25, a new 52-week high.
Ministers of the Organization of Petroleum Exporting Countries, or
OPEC
, meeting in Vienna on Tuesday decided to leave their oil output at its current levels. But the cartel said it would meet again on July 3 to consider increasing production if Iraq's suspension of oil exports continues.
Drug giant
Bristol-Myers Squibb
(BMY) - Get Report
said Tuesday night that its board had approved an increase of $2 billion in its stock-buyback program. The company is also reportedly close to buying the drug business of
DuPont
(DD) - Get Report
.
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Bonds/Economy
Treasury prices were weak this morning.
The benchmark 10-year
Treasury note was lately falling 4/32 to 97 25/32, while yields had slipped to 5.295%. Prices on the 30-year note were down 9/32 higher to 95 22/32, as yields dropped to 5.667%.
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International
European markets were near the flatline in early trading, while Asian markets closed overnight mixed. The
FTSE 100
was up 5.9 to 5928.4. The Paris
CAC-40
was off 1.5 to 5514.76 and the German
Xetra Dax
was losing 13.85 to 6228.28.
The euro was lately trading lower at $0.8513. The dollar was trading at 120.50 yen.
Tokyo's
Nikkei 225
ended off 0.1%, while Hong Kong's
Hang Seng
closed up 0.92%.
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