Investors decided to come out and punish the market. Luckily, the scolding was swift and light.
Less than half an hour into the trading session, the
Nasdaq Composite Index was making some nice gains again after a stint in the downside. And, the blue-chip
Dow Jones Industrial Average was taking a little more time to find its footing, but in recent trading was back above the flatline.
The market had to expect some pain, though. Investors, however, are starting to relax in how they interpret and digest the earnings news that's been coming out this season. Tech stocks were battered so much when everyone was preannouncing and confessing warnings that their misfortunes have already been priced in.
A stellar example is
. This morning, the beleaguered telecommunications equipmentmaker said that its
earnings were worse than expected. Lucent lost 30 cents a share in its first quarter, more than the 27-cent-a-share loss expected by analysts. The company also confirmed that it would slash 10,000 jobs and take a $1.2 billion to $1.6 billion restructuring charge. But no big drop here. Nope. Lately, the stock was up 4.7% to $19.69.
reported earnings last night that surpassed estimates by 2 cents and revenue that was $200 million more than expected. Wow, right? The news impressed nighttime investors, who sent the stock rocketing in
you have to remember the numbers it beat had been slashed back in
December when Lucent issued its latest warning.
While investors were focusing on the seemingly impressive numbers, Compaq was talking about its guidance for 2001 on a conference call. The company's CEO, Michael Cappellas, told analysts to expect revenue to grow 6% to 8% in 2001, well below estimates.
took a detailed look at the call in an
earlier story. Still, the stock was on the rise, in recent trading the stock was up 11.4% to $22.33.
Also on the jobs-slashing front was newly merged
AOL Time Warner
, which reportedly has plans to
cut its workforce. The stock was 2.1% higher to $55.20. And a host of smaller, Internet companies, including most recently
, have been letting go employees as they try to race to the finish line of profitability. Excite and MarchFirst announced their layoffs last night, as
did PC maker
. Excite@Home was up 0.4% and MarchFirst was down 4.2%. Gateway, though, was hopping 4.8%.
But all was not distorted or disappointing in other earnings announcements. Communications chipmaker
estimates by a penny and reported higher-than-expected revenue. The company's guidance for its next quarter said it would also beat estimates. Broadcom was rewarded by
Credit Suisse First Boston
with a boost to its 2001 full-year outlook, but the firm also slashed Broadcom's price target to $175 from $300. The stock was climbing 2.3% to $136.81.
was cruising higher 4.8% to $82.81 after it posted shining earnings. The software company's fourth-quarter results were a nickel
better than expected, but the company did say its growth slowed. Siebel left its 2001 guidance unchanged but hinted that its first-quarter revenue would beat expectations.
With all that love going on in the Nasdaq, the Dow was feeling a bit ignored. Of late, the index had one stock contributing 10 or more points to the positive and 1 to the negative. So it was suffering from having no real leadership in either direction.
This morning, another stream of earnings announcements came out with stars going to blue-chips
, which both beat estimates. DuPont's estimates had been
previously lowered, though. DuPont was up 1%, while ExxonMobil was down 0.5%.
was the stock adding more than 10 points to the upside. Last night, the software giant along with
announced resolution to a three-year-old lawsuit between the companies concerning a Java technology license agreement. Microsoft agreed to pay Sun a lump sum of $20 million for use of its Java technology in its products over the next seven years. Microsoft was lately up 3.3% and Sun was up 5%.
Johnson & Johnson
was the biggest drag on the Dow. Tuesday, the health productsmaker announced earnings a penny better than estimates, but it got slapped with a downgrade by
Salomon Smith Barney
this morning. The stock was lately off 1.6% to $91.19.
Elsewhere on the
New York Stock Exchange, drugmakers
both reported earlier today. Pfizer's numbers were
in line with estimates, while Bristol-Myers managed to beat estimates by a penny. Pfizer was lately unchanged and Bristol-Myers was down 3.8%.
There might be some sitting out today, waiting to see what
Federal Reserve chair
Big Al says Thursday when he addresses the
. His speech happens just two trading days before he and his crew meet up at the
Federal Open Market Committee. Investors are focused on the meeting, which concludes on Jan. 31, to find out the future direction of interest rates.
yesterday took a look at how soggy sentiment is
blurring the outlook for an economic recovery.
Last week, it was practically a given that the Fed was going to cut rates by 50 basis points, but this week, as the country gets used to a new president and many earnings reports come out as predicted, word on the Street is the cut will be only 25 basis points, which is a quarter of 1 percentage point.
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American Stock Exchange Pharmaceutical Index
was down 1.1%, after the aforementioned Pfizer and Bristol-Myers Squibb reported. Even though Bristol-Myers' earnings beat estimates, the Street was looking like it was expecting more. The stock even got an upgrade to buy from accumulate at
, but it didn't help. The stock was off 3.8% to $63.81.
The same thing happened Tuesday to
. The stock fell despite posting better-than-expected earnings. This morning, Merck got an upgrade to strong buy from
, but it, too, was off 0.2% in recent trading.
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Treasuries are still feeling the effects of Tuesday's news story that suggested a moderate, rather than drastic, cut in interest rates at the end of this month. Selloffs continued overnight in the shorter-term securities, which derive greater benefit in a falling rate environment. With mortgage rates remaining at low levels, the latest housing data indicates fairly active refinancing. This is not much news to the money market, which is really getting set for Thursday when Federal Reserve chairman Alan Greenspan addresses the
Senate Finance Committee
, and key employment cost data will be out. For now, trading remains quiet, and there is little movement in yields.
The benchmark 10-year
Treasury note lately was up 2/32 to 103 16/32, lowering its yield to 5.278%.
In economic news, the
Mortgage Applications Survey
) perceived a slight decrease in new mortgage activity as the
slipped to 332.6 in the week ending Jan.19 from 332.9 the previous week. The
remained robust at 2123.3 for the same period, though it is down from 2800.6. Homeowners continue to take advantage of lower mortgage rates to seek better terms. They may also use the excess liquidity to make purchases in other consumer sectors, which happened during the last refinancing boom of 1998-1999, thus shoring up the economy.
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