The market was getting no relief today thanks to a plethora of crummy earnings news and a surprisingly high
Producer Price Index number.
Look at the top of the list of most actively traded stocks on the
Big Board and you'll see a string of sad stories.
First off is
warned after the close Thursday of a sharp earnings and revenue shortfall, saying that the U.S. economic slowdown is "faster and more severe" than it had expected.
Yesterday, its competitor
was the market's savior, after reporting
better-than-expected earnings and raising its revenue estimates. In recent action, though, Ciena was the victim of the bad news and some profit taking. It was off 5.1%. Nortel was tanking, lately down 33.2%.
was caught up in the Nortel mess and creating
its own, falling 19.6% to $33.80, below its 52-week low of $34.48. Corning this morning lowered its revenue outlook.
was getting knocked down amid the Nortel news and a negative note from
Credit Suisse First Boston
. The firm lowered JDS' 2001 and 2002 forecasts. It was 17.9% lower.
"We believe it is prudent to have more conservative estimates at this time given the deterioration in visibility in optical spending, particularly in North America," CSFB wrote in a memo to investors this morning. "We believe the lowered visibility encountered by Nortel is not an isolated event and anticipate that
may also be experiencing weakness."
Who else was suffering today?
was dropping 15.5% on news that the
Food and Drug Administration
probe into the company's manufacturing processes and quality control was hurting sales.
, which licenses Claritin to Schering and is also working with the company on Clarinex, lately dropped 6.9%.
Then there's the inflation news that shook up investors this morning. The
Producer Price Index, which measures the change in wholesale prices, rose much more sharply than expected in January. The main number gained 1.1%, almost four times more than the 0.3% rise that was expected by economists polled by
. It is the largest gain in the index since Sept. 1990. Excluding the volatile food and energy sector, prices rose 0.7%, also far higher than the 0.1% increase that was predicted.
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The sector that follows computer hardware makers was getting battered today. The
Philadelphia Stock Exchange Computer Box Maker Index
was down 4.8%. Components
were mainly responsible for the action -- both reported bad earnings news after Thursday's closing bell.
Dell announced that it
missed lowered estimates by a penny, even though its revenue rose 28%. On a conference call, the company cut its guidance for earnings and revenue for its fiscal 2002 first quarter, which ends in April.
And blue-chip H-P, which beat estimates,
unhappily reported revenue that came in below already skeptical estimates. Also, the company pointedly told analysts and investors that it didn't expect business to get any better for the rest of the year. Analysts came out in droves to
praise and scold.
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Treasury prices are up as varied economic news and weakness in equities are giving bonds a "safe haven" quality at present. The money market had opened lower for the fifth successive session this morning as traders continued to adjust to a less aggressive climate for interest rate-cuts. But short-term notes led a turnaround as some bellwether technology companies disclosed poor corporate performance. Such an inverse development is normal when stock worries make investors move their money to liquid risk-free government securities. Wholesale price data released this morning hints of inflationary possibilities but industrial output is down, thus keeping economic signals mixed.
The benchmark 10-year
Treasury notelately was up to 13/32 to 99 3/32, lowering its yield to 5.117%.
Producer Price Index
), which measures the changing costs involved in the manufacturing process, was up by 1.1% in January after a gain of 0.2% the previous month. This is way above expectations and the biggest increase in more than a decade. Economists in a
poll had predicted a 0.3% rise. The sharp upturn does not change much when excluding the more volatile food and energy prices. The index still registers 0.7% growth, which is 0.6% more than expected. These numbers suggest that despite
Federal Reserve officials repeatedly stating that inflation remains in control, there may still be cause for concern. In such a scenario, the central bank will be even more wary of lowering interest rates in the near future.
) show that the real estate market is retaining considerable strength. The number of new privately owned units being built rose by 5.3% to 1.651 million in January, while 1.697 million building permits were issued in the same period, up by 12.6%. This rate hasn't been seen since Jan. 1990. Although private home building has been robust for the last three months, both numbers are higher than anticipated.
) fell by 0.3% last month, worse than expected. The capacity utilization rate, which shows how much of the factory equipment and personnel is being put to use, was 80.2% for January and not much below the earlier reading of 80.7%. Such anemic manufacturing numbers are well accounted for by the bond market.
Consumer Sentiment Index
chart ), which has a 1966 base value of 100, is 87.8 in the first half of February, its lowest level since Nov. 1993 and down sharply from the revised number of 94.7 last month.
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