Market Update: Dow, Nasdaq End Election Day Little Changed
Traders? Traders? Anyone? Bueller?
At the close, Wall Street was like Ben Stein after a Quaalude milkshake. The
Dow Jones Industrial Average and
Nasdaq Composite Index posted slight losses, after spending most of the day within 10 points of the opening number.
Volume was thin.
Real thin
.
Simply put, volume has been the real story today. At last check, volume on the
New York Stock Exchange
was 878 million, while volume at the
Nasdaq Stock Market
was 1.7 billion. On a busy day, the NYSE pushes well past 1.4 million shares traded, while the Nasdaq can easily top 2 billion.
On the Dow, where the vast majority of stocks were trading lightly and making little in the way of movement, that throbbing, red welt on
General Motors'
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stock kinda stood out. A little. The company, which gained close to $4 yesterday, gave nearly all of that gain back today. The automaker added 24 to the Dow's negative side. Also not helping:
Merck
(MRK) - Get Merck & Company Inc. Report
and
J.P. Morgan
(JPM) - Get JP Morgan Chase & Co. Report
.
IBM
(IBM) - Get International Business Machines Corporation Report
added 12 to the Dow's plus side, while 14 of the industrials were positive, helping to balance the tape.
Over on the Nasdaq,
Cisco's
(CSCO) - Get Cisco Systems Inc. Report
fallout has swept through the market.
Here are some givens: death, taxes and Cisco
releasing earnings that beat analyst estimates by a penny, while guiding estimates higher for future quarters.
Sure, it doesn't really have the same ring as the cliche it's based on, but it's just as true. Last night, Cisco released third-quarter estimates that did just that, beating estimates by a penny. And after taking an early morning hit, the shares rebounded nicely and ended up $1.63 to $56.75.
Cisco's release has wreaked havoc in a myriad of other companies. First, its competitors felt the heat, thanks in part to some gloating in Cisco's conference call about the earnings. (CEO John Chambers said: "If we continue to execute effectively on our strategy, these large competitors have clearly given Cisco the opportunity to repeat our breakaway in the enterprise market in the service-provider market.")
As a result,
Lucent
(LU) - Get Lufax Holding Ltd American Depositary Shares two of which representing one Report
fell 1.8%,
Nortel
(NT)
was down 3.6% and
Juniper Networks
(JNPR) - Get Juniper Networks Inc. Report
, a lesser competitor, was down 3.7%.
Semiconductors also took a hit. Within the earnings release, Cisco said it is carrying a large inventory, sparking fears that the company will not need to purchase as many chips from its suppliers. Specifically speaking, the company has 75 days of inventory on hand, up from 55 days, the highest peak since April 1996. And raw material inventory is up 335%.
As a result, the chipmakers fell.
Headed into the afternoon, markets were more than calm. They were dead.
Oh, and today is the presidential election, just in case you were concerned that it wouldn't get mentioned.
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Sector Watch
Chipmakers took it in the chops right from the opening bell. The
Philadelphia Stock Exchange Semiconductor Index
fell from the opening bell and ended near session lows. It was off 4.1%. None of this can be particularly pleasant for the semis, which took the seasonal change to fall more like a command and less like a gradual lowering of temperature. These guys have lost 38% since Sept. 1.
The semis were feeling pressure from Cisco's earnings release, which included a note about high inventories. People are concerned that the inventory means Cisco won't be placing orders for chips from these companies, adding yet another can of gasoline onto already burning fears of a semiconductor slowdown.
The worst chipmakers were the smaller guys.
Xilinx
(XLNX) - Get Xilinx Inc. Report
,
Linear Technology
(LLTC)
,
Lattice Semiconductor
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and
Altera
(ALTR) - Get Altair Engineering Inc. Report
were far lower.
Intel
(INTC) - Get Intel Corporation Report
and
Motorola
(MOT)
were lower, but not nearly as bad.
In more positive news, boxmakers in the
Philadelphia Stock Exchange Computer Box Maker Sector
was up 2.9%.
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Bonds/Economy
Bonds opened slightly lower but have since edged back to virtually unchanged levels as the market watches developments in the presidential election. (Bush is seen as negative for bonds while a Gore victory would probably have little effect. The reaction in the equities markets is likely to lead to an opposite response in bonds.) Once again, volume is light.
The benchmark 10-year
Treasury note was lately flat at 99 2/32, to yield 5.878%.
The 30-year
Treasury bond was also flat, at 104 29/32, to yield 5.897%.
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