Today should tell whether stocks are developing some immunity to bad news.
The market was doing its best to shrug off brutal earnings news last night from tech leader
In a repeat of yesterday's early action, the major indices were flip-flopping like fish out of water this morning. Despite yesterday's downgrades on a few networking systems providers and extreme volatility through the early afternoon, the Nasdaq and the Dow managed to rally into the close.
The Nasdaq, Dow and
S&P 500 have switched sides of the fence no less than four times each already this morning. The Comp was lately in the green, while the Dow and the S&P 500 were in the red.
If the Nasdaq rally holds until the close, it would mark its third consecutive up day in a long, long time. The Comp rose 45.4 points Tuesday to 2441.3 and 82.9 points to 2524.2 yesterday.
Weakness in biotechnology stocks was countering strength in the PC makers and some networkers and opticals. Yahoo! was the most actively traded stock on the Nasdaq, and was falling 14.6%, or $4.44, to $26.13. The second-largest pure-play Internet company after
, the company forecast 2001 earnings per share of 33 cents to 43 cents compared with analyst forecasts for as much as 59 cents a share last night.
The company also lowered its 2001 revenue forecast to $1.2 billion to $1.3 billion, just a touch above revenues for 2000 of $1.1 billion and falling short of the consensus forecasts from earnings tracker
First Call/Thompson Financial
of about $1.42 billion.
Credit Suisse First Boston
downgraded Yahoo! this morning.
AOL, in contrast, was up 3.6%, or $1.62 to $46.52.
TheStreet.com Internet Sector
index was falling -- just barely -- lower by 0.1% to 327.8.
Semiconductors were getting hit by several negative reports on the group and
Dan Niles suggested that investors sell all their semis stocks if the sector rallies. The
Philadelphia Stock Exchange Semiconductor Index
was lately up 2%.
Biotechs were also falling as investors took profits following a ripping two-day rally in this sector yesterday. The
Nasdaq Biotechnology Index
, which rose 6.8% over the two-day period to 948.8, was lately down 0.5%
PC makers seem to be enjoying a golden moment, however. This group was in good shape despite a negative report on
issued this morning. H-P was up 2.2%, while IBM was down 0.7%.
Old industrial stocks continued to take down the Dow today, though more traditional defensive stocks like the consumer staples were faring better than they did yesterday.
Minnesota Mining & Manufacturing
and chemicals company
were the biggest losers on the Dow, cutting a joint 22 points from the blue-chip index. But toothpaste titan
Procter & Gamble
, one of yesterday's worst Dow performers, was down only 0.5%. The
Morgan Stanley Consumer Index
was off only 0.9%.
The real strength in the market right now is investor optimism that the
Federal Reserve will cut interest rates by another half-point at the end of this month. The Fed's policy making body, the
Federal Open Market Committee, meets Jan. 30 and 31 to decide on interest rates. Last week, the Fed dropped the benchmark
federal funds rate 50 basis points to 6% in a surprise intermeeting move.
Still, it remains to be seen whether the market can take the Yahoo! news in stride.
It perhaps was no surprise that Yahoo! guided earnings estimates down for this year in its conference call last night. Companies are expected to issue disappointing outlooks this earnings season. With the shrinking dot-com universe and slowing economic growth taking a major toll on online advertising, pretty much all of the analysts were expecting Yahoo! to warn about coming quarters. But analysts were shocked by just how much Yahoo! slashed and burned.
Motorola, the world's second-largest cell-phone maker, meanwhile, was rising, up 3.8%. The company
met already lowered fourth-quarter earnings expectations last night, though it reported a decline in profit and said handset sales fell 20% in the quarter.
In a conference call with analysts this morning, Motorola said it wouldn't provide specific guidance for 2001 until it reports its first-quarter earnings.
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Commodity-related stocks continue to sink. The
Philadelphia Stock Exchange Gold and Silver Index
was down 1.4% and the
Philadelphia Stock Exchange Forest & Paper Index
was slipping 1.8%.
Meanwhile, transportation, utility, drugs and tobacco stocks were all lower. The
Dow Jones Transportation Average
was falling 0.5% and the
Dow Jones Utility Average
was 2.9% higher. One of the Dow's best performers last year, tobacco heavy-hitter
was slipping 3.4%, and the
American Stock Exchange Tobacco Index
was off 0.98%.
Amex Airline Index
was rebounding from yesterday's slide however, up 0.5%.
, the parent of American Airlines, which recently announced plans to consolidate with now-bankrupt
, was also bouncing back from yesterday's selloff, up 0.5%.
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Bond prices were basically flat following a much weaker-than-expected weekly
jobless claims report this morning. The benchmark 10-year
Treasury note was lately up 1/32 at 104 29/32, yielding 5.094%.
Jobless claims for the week ending Jan. 6 fell to 345,000 from a revised 381,000 for the prior week. Economists had been forecasting 374,000 for the week.
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