Market Update: Few Smiles Found on Wall Street
Unhappiness prevails on the Street.
Since Friday, talk had made a
Fed move before its next meeting on March 20 seem likely, but Fed Chairman
Alan Greenspan's speech before the
House Finance Committee
quashed that belief and sent the major stock market indices tumbling.
Although Greenspan indicated he sees slowing in economic growth and a decline in consumer confidence, the
speech was largely the same as one he delivered two weeks ago before the Senate. His words did not suggest an intermeeting cut was at hand.
The
Dow Jones Industrial Average and the
Nasdaq Composite Index were dropping with nothing out there to rev investors' engines. Only negative earnings news and crummy research notes abounded.
Altera
(ALTR)
was the object of scorn today and dragging chip stocks lower thanks to a
post-close warning Tuesday. It saw
UBS Warburg
TheStreet Recommends
and
Lehman Brothers
come out with their scissors to
trim earnings estimates. The stock has been up and down all day, but lately was (surprise!) on the upside. It was lately 1.3% higher.
Altera's fallout hit
Xilinx
(XLNX)
, which also got socked with an estimate
cut by Lehman. It was off 1.9%. And
Elantec Semiconductor
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created its own
problems when it came out with a warning for its second quarter, citing weakening demand in the PC industry. Hold on to your hat. The stock was dropping 36.9%.
In the past couple weeks,
Juniper Networks
(JNPR)
, rival of networking giant
Cisco
(CSCO)
, has been suffering along with most of tech. About two weeks ago, the company got a nice boost from news that
Merrill Lynch
started coverage of the stock with an accumulate and set its 12- to 18-month price target at $110. Today, Lehman begged to differ. It slashed the stock's target price target to $100 from $175, helping to send it down 1.5% to $61.88. Earlier in the day, it hit a new 52-week low.
The blue-chip Dow was suffering from widespread weakness.
Home Depot
(HD)
,
IBM
(IBM)
and
United Technologies
(UTX)
were helping to drag the index lower.
Elsewhere on the
Big Board,
RadioShack
(RSH)
was jumping 3.2% to $42.12 after the electronics retailer was started at
Prudential Securities
as a strong buy with a 12-month price target of $54. The company announced it had entered into a deal with video rental chain
Blockbuster
(BBI)
through which RadioShack would sell its products inside the video-rental stores.
Sector Watch
With no real hope for an intermeeting cut, financials were getting hit hard. The
American Stock Exchange Broker/Dealer Index
was 3.8% lower and the
Philadelphia Stock Exchange/KBW Bank Index
was down 2%.
Interest-rate sensitive blue-chips
American Express
(AXP)
,
J.P. Morgan
(JPM)
and Citibank were all on the downside.
Investors weren't even seeking shelter in the safety of gold/ The
Philadelphia Stock Exchange Gold and Silver Index
was dropping 2.9%. The index has lately gotten a nice bounce from frightened investors fleeing to that which is usually the ultimate defensive.
Still, not all defensives were on the slide -- drugmakers doing fairly well. The
American Stock Exchange Pharmaceutical Index
was rising 0.9%.
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Bonds/Economy
Treasuries are mixed as traders realize they will probably have to wait until late in March for an interest rate cut. Short-dated securities, which are more sensitive to revisions in short-term lending rates, are moving positively after having slipped earlier today. The long bond is down slightly, while its yield has not changed much.
Greenspan he once again
expressed concern about the economy, reiterating to Congress that he expects a slow recovery and possibly more dips before the eventual pickup. Though his words clearly point to further rate cutting, his remarks also snuffed out hopes the Fed would move before its next scheduled meeting on March 20.
The benchmark 10-year
Treasury note lately was up 3/32 to 100 14/32, lowering its yield to 4.944%.
In economic news, a revised reading of the
gross domestic product
(
definition |
chart |
), which measures the rate at which goods and services are produced in the nation, is at 1.1% for the fourth quarter of last year. That's its slowest rate of growth since the second quarter of 1995, when it was 0.3% lower. Still, it is slightly above the 1.0% predicted by economists.
The latest
Mortgage Applications Survey
(
definition |
chart |
source
) detected an increase in the purchase of new units, but a decrease in home refinancings. For the week ended Feb. 23, the purchase index rose to 291.4 from the 274.3 in the previous week. The refinancing index fell to 2140.4 from 2346.1. Greenspan mentioned the relatively strong showing in home and automobile sales as a sign that some sections of the economy are holding steady.
The
Chicago Purchasing Managers' Index
(
definition |
chart ) rose to 43.2 during February after falling to 40.2 for January. The gauge indicates a contraction in the manufacturing sector when below 50, so it still clearly indicates that sector of the economy is in recession.
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