The market's encased in Teflon once again, as stocks continue their general upward trend despite a handful of mixed earnings releases and a nasty report from the Philadelphia Fed survey of
business conditions in the Mid-Atlantic region.
Bonds are rallying on the Philly Fed survey, which showed a significant drop in business activity, leading the market to think the
Federal Reserve is likely to be aggressive in cutting rates on Jan. 31, when it next meets. The Fed's index of current manufacturing conditions fell 4.2 points, to -36.8, in January, its lowest reading since Dec. 1990, when the country was in recession.
Dow Jones Industrial Average was gaining, led by a magnificent performance out of
, soaring after releasing strong earnings following yesterday's close. IBM was lately adding 78 points of lift to the Dow.
IBM was up 12.2% to $108.50 after
posting earnings that were 2 cents better than consensus estimates. Big Blue lately was the third most actively traded stock on the
New York Stock Exchange.
Nasdaq Composite Index was also moving higher, with another day of positive breadth and strong performance in the networking, optical fiber and semiconductor sectors. The average was still near session highs after another round of
big names reported earnings after yesterday's closing bell and before this morning's opening.
A number of stocks that missed earnings estimates were improving despite their bad news, including
Advanced Micro Devices
AMD fell short of expectations yesterday, but were stronger in today's action.
was bouncing 8.6% to $18.19. Last night, it reported its first loss in three years, but beat lowered estimates. Investors were rewarding the company for its aggressive price-cutting, which has helped it lower inventories to a supply of five and a half weeks, about normal, from the 11 weeks they stood at in early December. The ratio of inventories-to-sales was lately at a 19-month high, according to the
; a buildup in inventories is often a harbinger of a slowing economy, as well as a slowing in sales at a particular company.
On the Dow,
, which makes handheld items like backhoes and construction equipment, beat estimates, but projected its 2001 sales to be flat because of a decline of 5% to 10% in North America construction equipment sales. The news is pulling the stock down. It was lately losing 6.8% to $41.56, making it the blue-chip index's biggest drag.
The Nasdaq's rally is being led by such big-caps as
. Sun and Microsoft are scheduled to report earnings after the closing bell tonight.
One Comp component not helping out was
, which met fourth-quarter estimates but lowered its outlook for the first quarter and full year. The Web management company said it would cut its workforce because of the slowdown in tech spending. The stock was 41.5% lower to $7.38.
Another major drag on the tech-heavy index was
. The company's fourth-quarter earnings
beat expectations, but added that its gross margins are declining. The stock was off 15.7% to $41.
Oil sectors were suffering again. Oil stocks saw a sharp decline in prices yesterday after OPEC announced a production cut of 1.5 million barrels a day. The
American Stock Exchange Oil & Gas Index
was down 0.9%, while the
Philadelphia Stock Exchange Oil Service Index
was dropping 4.3%.
The California crisis continues and it's not looking any better for two of the state's largest utilities,
. The California utilities are threatening bankruptcy and defaulting on loans. They were given some extra time to pay delinquent bills by Gov. Davis last night. The governor declared a state of emergency last night, ordering the state to buy power through the Department of Water Resources and authorizing rolling blackouts.
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Treasuries are trading sharply higher. Brief weakness at the start of the day was in part attributable to stronger-than-expected housing and employment data. But this was later offset by dismal manufacturing news for the mid-Atlantic region, which painted a gloomier economic picture. The most vigorous U.S. Treasuries are the longer-term instruments, the yields of which have lowered, though they remain above the levels of mid-December.
The benchmark 10-year
Treasury note lately was up 31/32 to 104 25/32, lowering its yield to 5.112%.
In economic news,
initial jobless claims
), which are weekly benefits sought by the newly unemployed, fell to 306,000 in the week ended Jan. 13, from 343,000 in the previous week. The steep drop was much lower than expected, as economists polled by
had actually forecast a rise to 360,000. Analysts attributed the plunge to seasonal factors, such as temporary holiday help or the fact that laid-off workers may be returning to work after staying home due to the weather.
) rose 0.3% to 1,575,000 units in December, while the number of building permits issued dropped 6.6%. The rise in new homes, primarily single-family units, is somewhat surprising considering the severe cold last month. But low mortgage interest rates, which have been declining for many weeks, provided the incentive. The four-week average, however, fell to 350,000 from 362,250, This is the first decrease since the first week of December.
Philadelphia Fed Index
) fell sharply, to -36.8 in January from -4.2 in December. This is its lowest reading since December 1990. The index, which monitors manufacturing activity in the economic district of Pennsylvania, New Jersey and Delaware, signifies economic contraction when negative.
Consumer Comfort Index
chart ), which measures the confidence consumers retain in the economy, declined to 16% in the week ended Jan.14, from 23% the previous week. It is 12 points below its 12-month average and well below the period high of 38%.
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