The major indices were rebounding this morning...again. Few stocks or sectors have escaped the recent market shakeout, and investors may think stocks are looking cheap. But don't be too surprised if the bounce fades later in the day. The market has tried to bounce several times in the past week without anything to show for it.
downgrade to market perform from outperform on optical stocks
( NT) this morning sank the tech-heavy
Nasdaq Composite Index right out of the gate.
Bernstein blamed the downgrade on concerns of a slowdown in spending on telecommunications equipment, but then
Salomon Smith Barney
countered Bernstein's call, reiterating their buy ratings on the companies. Salomon said it thought the Bernstein call was "old news," while Merrill acknowledged these stocks could be under pressure for the next few weeks. Cisco was lately down 0.6%, while Nortel was up 5.1%. Nortel was rising on news that it has won contracts for $525 million to build wireless networks in China and Taiwan.
Cisco's pain was spreading to other fiber-optic names such as
. Corning was lately off 0.2%.
( LU) was rising, however. Lucent was 8.7% higher, with traders suggesting that it put in a bottom yesterday.
( EXDS) was another Nasdaq loser. The stock was getting clobbered following news of its plans to acquire
GlobalCenter Web-hosting unit for about $6.5 billion in stock. A deal was initially aborted two months ago. Exodus, one of the Nasdaq's most actives, was down 10.5%.
So what was giving wing to the Nasdaq? Internet stocks were certainly helping.
The Internet sector was making a comeback this morning after
made positive comments on it. The firm said yesterday's selloff was unwarranted. Internet stocks had a lousy session yesterday after
warned of an earnings miss.
Morgan was bullish on
, which were rising 1.9%, 9.7% and 6.9%.
Even Internet incubators like
( CMGI) and
Internet Capital Group
were rebounding. These stocks hit 52-week lows in trading yesterday. CMGI was lately up 10.1%, while Internet Capital rose 12.3%.
( HWP) and
Procter & Gamble
were the Dow's rising stars. H-P was adding some 15 points of upside to the blue-chip benchmark, with Procter adding 24. Procter was getting a lift after it said this morning that it thinks double-digit EPS growth on the year is achievable.
( EK) continued to put pressure on the index, however. Kodak was falling for a third straight day this morning after warning that its third-quarter earnings per share would fall 20 cents to 25 cents below its previous forecast. Kodak has fallen some 32% in the past three days, and was currently cutting just 8 points from the Dow.
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The energy stocks were giving up their traditional strength at the open. The
American Stock Exchange Oil & Gas Index
was off 1.1%. Other defensive stocks continued to show strength however, with the
Amex Tobacco Index
up 3.6%, the
Dow Jones Utility Average
1.5% higher and the
American Stock Exchange Pharmaceutical Index
Financial stocks were also showing strength. The
American Stock Exchange Broker/Dealer Index
was up 2.4%, the
Philadelphia Stock Exchange/KBW Bank Index
was up 2.0%, and the
S&P Insurance Index
was 1.3% higher.
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Treasuries are narrowly mixed despite upward revisions to the
Consumer Price Index
), which were made
Bureau of Labor Statistics
this morning announced that in each month from January to August, the CPI was 0.1 percentage point higher than originally reported, except in May and July, when it was higher by 0.2. The inflation rate in August was 3.5%, revised from 3.4%, and the core inflation rate, which excludes food and energy prices, was 2.7%, revised from 2.6%, the BLS said.
The BLS revised the CPI after discovering that a software error had resulted in miscalculations.
The benchmark 10-year Treasury note lately was up 2/32 to 99 16/32, yielding 5.816%
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