A negative bias was creeping into the market as losses deepened in the tech sector and gains in the blue-chips began to evaporate. The
Dow Jones Industrial Average let go of its modest gain and was lately swinging near break-even.
Nasdaq Composite Index was falling slowly but surely.
Morgan Stanley Dean Witter
stirred things up in the financial sector with a mixed bag of numbers for its third-quarter earnings report. The investment bank reported earnings of $1.09 a share, missing the 14-analyst estimate of $1.17, but up from year-ago earnings of 83 cents a share. Still, Morgan Stanley reported a 28% jump in third-quarter profits due to trading gains.
The news that it missed the consensus estimate came as a bit of a surprise, since fellow brokerage firms
posted strong earnings results earlier this week. Morgan Stanley was lately tumbling $10.06, or 10.4%, to $85.94.
And for investors sick of hearing earnings sob stories, Dow component
reported positive outlook news, which was music to the ears. The diversified manufacturer said it expects annual sales growth of about 11% and earnings-per-share growth of about 13% over the next three years. 3M said strong results in Asia will help it achieve earnings expectations for the second half of the year. The company also said it is redirecting its investments toward high-growth sectors. The stock was lately popping 6% to $86.69.
Car rental company
sped to the top of the Big Board highfliers list after
offered to reacquire the 18.5% of the company it doesn't already own for $30 a share. The price represents about a 24% premium over yesterday's closing price. It was lately flying 28.6%, to $13.13.
The equity market, having lost all of its August gains in the first two and a half weeks of September, got a shot in the arm this morning from one of its biggest bulls -- Goldman Sachs' chief strategist Abby Joseph Cohen.
The Goldman strategist today reiterated her current equity allocation and said the market's concerns about oil, the euro and earnings are "overdone." She said the intermediate and long-term view on the market remains "bright."
Other strategists agree with that. Peter Cardillo, chief strategist at
says all the current negativity will eventually give way to upside or a relief rally. He expressed optimism about the third-quarter earnings outlook. "The elimination process of the above
earnings, energy prices and euro weakness will begin with corporate earnings. From a contrarian viewpoint, when negative sentiment increases to its heights, a turnaround usually sets in. The more negative news, the greater the chance that an elimination process will take hold, and we could see a reversal process set in. Until then, it's going to be choppy," he said.
Though most indicators have lately been backing up the notion that inflation is in check, investors appear unwilling to let down their guard as long as oil prices continue to bump up against decade highs on supply concerns. And the
euro, which has been steadily touching new lows, is not exactly inspiring confidence in multinational companies.
has been covering the oil crisis carefully. Our most
recent story appeared yesterday.
has been tracking companies that have issued warnings about upcoming earnings, most of which have been affected by the weak euro or high oil prices -- or both. A chart of these warnings is
published separately. Volatility has been the name of the game in the past few trading sessions, as the market reacts quickly -- and not always rationally -- to the slew of earnings previews, both good and bad.
"From a technical standpoint, the market needs to bounce. The Dow has broken down and is approaching support levels -- we might get a relief rally," Cardillo said. "The Nasdaq, which did reach support levels earlier in the week, has bounced off them," he said, referring to the Comp's triple-digit twist on Tuesday.
Also on the earnings front, cruise operator
posted third-quarter earnings of 67 cents a share, beating the consensus estimate of 64 cents. The stock has been scraping the bottom of a trading range for most of the year and is down more than 50% year to date. Lately it was sailing up $1.69, or 7.4%, to $23.69.
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Financials were falling lower in the wake of Morgan Stanley Dean Witter's disappointing earnings report. The
American Stock Exchange Broker/Dealer Index
was off 3.6%, while the
Philadelphia Stock Exchange KBW/Bank Index
was losing 2.1%.
Telecom stocks were seeing mixed action.
was sliding 5.6%, while
was off 5%. A weak outlook from
yesterday translated into a European beating amid heightened concern about funding and debt levels. The
Nasdaq Telecommunications Index
was off a modest 0.3%.
Crude oil futures eased a bit on the
New York Mercantile Exchange
after presidential candidate Al Gore proposed that oil be released from the nation's Strategic Petroleum Reserve to curb prices. Oil stocks were taking a breather with the
Philadelphia Stock Exchange Oil Service Sector Index
down 1.6% and the
American Stock Exchange Oil & Gas Index
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Bonds are little changed on little news. Oil, which has been the main influence on bond prices in the last several sessions, is modestly weaker.
Alan Greenspan does not address the economy or monetary policy, and the only major economic report, the
Philadelphia Fed Index
) for September, was more or less in line with expectations. It fell to 8.2 in September from 14.1 in August, indicating slower growth in the manufacturing sector.
Later in the session, the Treasury Department will conduct its latest
buyback, targeting $1.5 billion of 30-year bonds issued between 1987 and 1991.
The benchmark 10-year Treasury note lately was down 5/32 to 98 24/32, yielding 5.92%
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