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Tech, Bonds Feel the Pressure

A selloff in Dell beckons, and Hewlett's news is none too good, either.

The stock market is focused on two things this morning, and neither of them bodes well for stocks.

The first is


(DELL) - Get Free Report

. When it reported last night, all the worries about the computer maker's fourth-quarter numbers turned out to be true. At $5.17 billion, revenue was not what Wall Street would have liked it to be. Even earnings were something of a disappointment -- in line with analyst estimates, they bucked the trend of constantly beating the consensus.

It didn't help that



-- the company that some analysts thought was beginning to crawl out from under its rock -- also reported disappointing revenue last night. It looks like all the box makers may be seeing sales slow. Fewer computers, fewer chips. Less software. Fewer routers. That is the calculus running through traders' minds this morning. In an open where stocks look like they'll drop, techs will drop the most.

The other thing the stock market is watching this morning is the bond market, and there too the news is not so good. After yesterday's big run-up, the Treasuries are giving back some ground. Not a big deal for bond traders -- it looks like little more than profit-taking -- but something to add to stock traders' unease.

"This is pretty ugly," said Bill Meehan, market analyst at

Cantor Fitzgerald

. "I'm not sure without the help of the bond market, we're going to get the same type of strength outside of technology that we did yesterday."

In what has been an incredibly narrow market, it is especially disconcerting to see a leader like Dell fall. "Unless this market broadens out, it could get very bad," said Meehan. "The technicals of this market are rotting and I don't see the fundamentals supporting these levels in the big-cap leadership."

At 9 a.m. EST, the

S&P 500

futures were off 9.7, nearly 13 below fair value and indicating a negative open. The 30-year was off 9/32 to 98, lifting the yield to 5.36%.

Japanese stocks slipped, as investors took chips off the table after four days of gains. The


shed 73.97 to 14,158.67.

Most other Asian bourses were closed for the Lunar New Year.

With Wall Street looking weak, Europe's major markets were all lower. In Frankfurt, the


was down 107.13, or 2.2%, to 4797.55. In Paris, the


was off 85.54, or 2.1%, to 3966.78. And in London, the


was down 48.3 to 6060.3.

Wednesday's Wake-Up Watchlist


Brian Louis

Staff Reporter

  • Dell reported revenue of $5.17 billion, up from the year-ago $3.74 billion but short of Wall Street targets. The company met the 31-analyst First Call prediction for earnings of 31 cents a share, 11 cents above the year-ago figure, and set a 2-for-1 stock split. took a look at Dell and Hewlett-Packard's earnings in a story yesterday. Hewlett-Packard beat Wall Street expectations when it reported first-quarter earnings of 92 cents a share, 9 cents above the 21-analyst outlook and ahead of the year-ago 86 cents.
  • Applied Materials (AMAT) - Get Free Report posted earnings of 11 cents a share, topping the First Call 24-analyst forecast for 6 cents but falling short of the year-ago 52 cents. took a look at the company's earnings yesterday. Donaldson Lufkin & Jenrette upgraded Applied Materials to top pick from buy.
  • America Online (AOL) is in talks with eBay (EBAY) - Get Free Report about developing a closer business relationship, including the possibility of AOL acquiring a minority stake in the online auctioneer, The Wall Street Journal reported.
  • Scana (SCG) is buying Public Service Company of North Carolinaundefined for $900 million, including debt. The transaction is expected to be accounted for as a purchase and is anticipated to be accretive to Scana's earnings per share in 2001. Under terms of the deal, PSNC shareholders will receive $33 a share. PSNC closed yesterday at 22 3/4. In other news (earnings estimates are from First Call):
  • American Media (ENQ) , which publishes the National Enquirer, Star and Weekly World News, agreed to be acquired by an affiliate of privately held Evercore Capital Partners for $767 million.
  • Analog Devices (ADI) - Get Free Report posted first-quarter earnings of 18 cents a share, beating the 17-analyst view by a penny. The company said that with increased backlog and a generally improved business tone in most regions of the world, sequential revenue growth of 6% to 8% in the second quarter "appears realistic." Also, second-quarter earnings could grow about 20% sequentially if the company achieves revenue at the higher end of its projected range, the company said.
  • BP Amocoundefined said replacement cost profit for the fourth quarter, before exceptional items, was $875 million after adjusting for special charges, compared with $1.4 billion in the year-ago period, due to the substantial fall in oil prices and a downturn in the refining and chemicals environments. The company said crude oil prices are likely to remain broadly unchanged with supply in excess of weakened demand and high stock levels and any change will depend on the supply-side response to the oil price.
  • Fluor (FLR) - Get Free Report posted first-quarter earnings of 68 cents a share, a penny shy of the seven-analyst estimate and up from the year-ago 66 cents.
  • Fruit of the Loomundefined posted a fourth-quarter loss of 15 cents a share, better than the five-analyst consensus view of a loss of 17 cents.
  • Medtronic (MDT) - Get Free Report said third-quarter revenue from its newly acquired Arterial Vascular Engineering unit fell below its expectations.
  • NEC (NIPNY) is bracing itself for a consolidated net loss of between 150 billion and 200 billion yen for the fiscal year ending March 31, the Nihon Keizai Shimbun newspaper reported in its Wednesday morning edition, citing company sources. Hisashi Kaneko, president of the company, is expected to step down, the newspaper reported.
  • SportsLine USA (SPLN) , publisher of CBS SportsLine, announced a strategic agreement with Internet company (INSP) - Get Free Report. Under the pact, will become a distributor of SportsLine USA's sports content, merchandise and premium services through a new sports channel that will be launched during the current quarter.
  • United Rentals (URI) - Get Free Report posted fourth-quarter earnings of 33 cents a share, beating the 12-analyst view of 29 cents and up from the year-ago 20 cents.