Market Update: Bulls Charge Up Dow, Tech Falters
After Friday's gory selloff, the brave and the bullish were struggling to scrape the
blue-chip
Dow off the floor this morning. But tech stocks were having a tough time getting unstuck. The
Nasdaq was lately bobbing just below the flatline.
Volume was light, as usual, and breadth was narrowly mixed. Winning stocks were beating losing stocks by just 14 to 12 on the NYSE, while losers were beating winners by 18 to 13 on the Nasdaq.
Retail giant
Wal-Mart
(WMT) - Get Walmart Inc. Report
and home-improvement leader
Home Depot
(HD) - Get Home Depot Inc. (The) Report
were providing some ammunition to the Dow after beating and meeting earnings estimates, in that order. But Home Depot was doing the heavy lifting, adding 13.4 points of upside to the index. Wal-Mart was giving the Dow a smaller 9 point kick.
Wal-Mart beat lowered analyst estimates by a penny, at 45 cents per share, while Home Depot met its lowered estimates at 20 cents a share.
TheStreet.com
wrote separate stories on
Wal-Mart and
TheStreet Recommends
Home Depot's earnings.
But the Nasdaq couldn't seem to get up from under the weight of last week's earnings warnings. Friday's guilty three continued falling today. Networker
Nortel Networks
(NT)
and PC makers
Hewlett-Packard
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and
Dell
(DELL) - Get Dell Technologies Inc. Class C Report
all warned of continuing weakness in coming quarters, and were largely responsible for Friday's selloff. Nortel was lately down 2.6%, H-P was falling 7.8% and Dell was off 3.2%.
Some negative comments from
Lehman Brothers
this morning on tech-gear makers didn't help either, and chip stocks and communications-equipment makers were in the dumps today. Lehman this morning reduced its estimates on communications-equipment maker
JDS Uniphase
(JDSU)
, echoing recent calls by
Merrill Lynch
and
Credit Suisse First Boston
. JDS was falling 8.3% as the second-most actively traded stock on the Nasdaq. Nearly a week and a half after announcing its own warning,
Cisco
(CSCO) - Get Cisco Systems Inc. Report
remains one of the most actively traded on the index. So far this morning, it's trading down 3.5%.
Lehman also cut estimates on communications-equipment maker
Broadcom
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, and on chipmaker
Applied Micro Circuits
(AMCC)
because of concerns about the optical slowdown. It also had negative views about
PMC-Sierra
(PMCS)
. Investors were slashing some5.1% from Broadcom, cutting 11.1% from Applied Micro Circuits and biting a 7.5% hole in PMC Sierra.
The market may want a rally, but most folks don't think it will see anything lasting until there's some real improvement in both corporate earnings and the economy -- or at least until the fog lifts and
visibility improves. A bunch of Wall Street's high-tech corporate hot-shots have recently said that their crystal balls are getting awfully murky, and they no longer have a clear sense of their future business performance.
So watch for any errant earnings warnings. As the fourth-quarter earnings season winds to a close, companies and investors are looking ahead to first-quarter earnings. A report that came out on Friday from earnings tracker
First Call/Thomson Financial's
Joseph Kalinowski suggested that the unofficial earnings warning season may get off to an early start for the first quarter.
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Sector Watch
Retail stocks were getting the obvious boost from Home Depot and Wal-Mart earnings, and the
S&P Retail Index
was up 2.97%.
Financials and tech stocks were getting the most flack from investors. The
American Stock Exchange Broker/Dealer Index
was off 3.1%, the
Philadelphia Stock Exchange/KBW Bank Index
was down 1.94%.
In tech, Wall Street was socking it to the PC makers, the chipmakers and the networking stocks. The
Philadelphia Stock Exchange Semiconductor Index
was tumbling 3.1% and the
American Stock Exchange Networking Index
was down 2.5%.
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Bonds/Economy
Treasury prices were falling again this morning after slipping for four successive days, as the money market has been trimming its hopes for an aggressive interest-rate cut next month. The decrease in value was steepest at the long end last week, with the 30-year bond finishing two-thirds of a point lower.
This morning, the benchmark 10-year
Treasury note was down 6/32 to 98 31/32, yielding 5.131%.
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