Today's Market: Indices Creep Up Despite Low Volume at Midday
Cheap. Cheap. The crickets chirped quite loudly at midday as investors lightly picked over the Nasdaq bargain bin on super thin volume. And despite the fact that the presidential election is now two weeks old, there's no end in sight.
It's lunchtime in New York, and as people on Wall Street nibbled on overpriced sandwiches, both the
Dow Jones Industrial Average and
Nasdaq Composite Index were slowly climbing up from the negative trend that hit after early opening strength. Moves have been relatively light as markets absorb news from
Florida's Supreme Court
, which said that it did not have a timetable on handing down a ruling over whether to accept the manual hand court.
And you know what that means! Markets don't like uncertainty!
"The mood is not good. Nobody wants to get involved in the markets," said Michael Lyons, senior trader with
Morgan Stanley Dean Witter
. "People are just fed up. And over the last few days, buyers have just left. There was practically a buyer's strike out there."
Not every buyer took today off. One day after the Dow dipped close to 2% and the Comp closed below 2900 for the first time in well over a year, the Dow was up moderately over the flatline, and the Comp was, too. But activity was pretty light overall, and Lyons said this morning's bounce was "unconvincing."
"Every day, it seems like there's another problem falling from the sky," he said. "Today, it was
Lucent
(LU)
."
Today, Lucent announced that it had identified a "revenue recognition issue," which affects $125 million in revenue for its fourth quarter. This represents a 2 cent per share impact on the fourth quarter, which was previously announced to come in at 18 cents a share.
The issue was discovered as the company was wrapping its fiscal year. Lucent Chief Executive and Chairman Henry Schacht, who just replaced ousted CEO Rich McGinn about a month ago, said the following in a press release this morning. "We wanted to make this public as soon as we discovered the issue. I have asked our outside auditor and our outside counsel to assist us in doing a complete review of this and any related issues. We have also informed the
Securities and Exchange Commission
of our efforts."
Lucent's blood-red logo is especially apt this year, since the company has put itself into a circle of pain after guiding estimates lower four straight times while missing earnings forecasts all over the place. And today Lucent was falling $3.13, or 15%, to $17.75, hitting a 52-week-low in the process.
The Lucent news was self-contained, as opticals were the primary force driving the Nasdaq's slim gain.
Ciena
(CIEN) - Get Report
,
JDS Uniphase
(JDSU)
and
SDL
(SDLI)
were all making nice upside moves.
On the Dow, the blue-chips were making moderate moves, with few outstanding winners and losers. Things were tentative while
Boeing
(BA) - Get Report
,
3M
(MMM) - Get Report
,
Merck
(MRK) - Get Report
and
ExxonMobil
(XOM) - Get Report
led stocks to the upside.
IBM
(IBM) - Get Report
,
J.P. Morgan
(JPM) - Get Report
and
Procter & Gamble
(PG) - Get Report
led the losers.
Nontechnology stocks were flourishing, especially the petroleum sectors, which were much higher as the thought of a long, cold winter warmed business prospects. The
American Stock Exchange Natural Gas Index
was rising 1.3%, while the
American Stock Exchange Oil Index
was lately up 1.7%.
So, when will this end? When will volume pick up, buyers return and conditions improve? Well, don't count on the elections to help bail things out this year, said Lyons, the Morgan trader.
"We're running into the end of the year," he said. "You'll get a bounce, but it may be short-lived. You're going to have a lot of year-end short covering and portfolio adjustments. There is cash on the sidelines, which may come into play, but it'll be the beginning of the year before we see a true rally."
But for the time being, Lyons, and the markets on the whole, were clinging to their tentative bias.
"You're almost afraid to stick your neck out in this market for fear you'll get your head cut off."
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Market Internals
Really, is anyone going to work this week? Where are the traders? Where are the trades? What ever happened to the volume? Trading continued to be anemic, while internals were leaning towards "crummy."
New York Stock Exchange: 1,196 advancers, 1,429 decliners, 554 million shares. 38 new 52-week highs, 83 new lows.
Nasdaq Stock Market: 1,280 advancers, 2,264 decliners, 861 million shares. 20 new highs, 281 new lows.
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Most Active Stocks
NYSE Most Actives
- Lucent: 33.8 million shares.
Nortel (NT) : 17.1 million shares.
AT&T (T) - Get Report: 12.1 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Report: 32 million shares.
Oracle (ORCL) - Get Report: 29.9 million shares.
WorldCom (WCOM) : 24.8 million shares.
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Sector Watch
As rapper Phife Dawg from
A Tribe Called Quest
would have put it -- chipmakers get an "E" for nice effort and "T" for nice try. As investors put it, they simply get an "F."
Yesterday, the collected components of the
Philadelphia Stock Exchange Semiconductor Index
rallied in the last two hours of trading, reversing 4% losses and posting gains of 2% before watching that effort falter. The SOX, as the semiconductor index is known informally, ended yesterday with a heart-breaking loss.
And today, semis continued to fail as the SOX was dropping 3.7%. Wireless and peripherals weren't improving, either. The
Philadelphia Stock Exchange Wireless Telecom Sector
was dipping 0.6%, while the
American Stock Exchange Disk Drive Index
was dipping 2.1%.
Yes, there are other sectors besides technology. And some of those were doing quite well today. Oil and other commodity-related companies were higher. The
Philadelphia Stock Exchange Oil Service Index
rose 1.2%, while the
Philadelphia Stock Exchange Gold & Silver Index
continued to rally, gaining 2.9%.
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Bonds/Economy
Treasuries are slightly lower on little news. The primary influence on bond prices continues to be the stock market, where selloffs spur buying of Treasuries and rallies trigger selling of Treasuries.
Yesterday's stock-market selloff produced modest gains for Treasuries. Today, stocks are in the green and Treasuries are in the red. The benchmark 10-year
Treasury note lately was down 4/32 at 100 14/32, lifting its yield to 5.689%.
In economic news, the
trade deficit
(
definition |
chart |
) swelled to a record $34 billion in September as import growth outpaced export growth. Imports rose 3.1% to $126 billion, while exports fell 0.7% to $92 billion. A much smaller widening had been forecast by economists polled by
Reuters
.
The rising deficit has no clear market implication, but it will probably result in a substantial downward revision to the third-quarter
gross domestic product
(
definition |
chart |
) growth rate, which the government will restate next Wednesday. The initial estimate of 2.7% is likely to be revised to 2%, economists at
Barclays Capital
said.
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International
European markets ended with a strong finish after dipping midday. In the U.K., stocks lost some of their earlier strength on news that the U.S. trade gap for September shot to a new record.
In London, the
FTSE 100
closed up 37.1 to 6382.1.
Over on the continent, the
CAC-40
in Paris rose 59.23 to 6081.02 and the
Xetra Dax
, which was still trading in Frankfurt, was up 39.71 to 6649.19.
The beleaguered euro was giving up a bit of recent strength, trading down at $0.8459.
Asian equity markets closed lower overnight.
Tokyo stocks sold off for the fourth straight session after Prime Minister Yoshiro Mori survived a no-confidence vote in parliament, strangling any hopes that a reform-minded government would take power and turn the economy. Hong Kong's blue-chips closed lower on weakness in telecoms and techs.
In Tokyo, the
Nikkei 225
slipped 123.19, or 0.85%, to 14, 408.46.
The greenback was lately trading higher to 110.29 yen.
Hong Kong's
Hang Seng
index slipped 158.36, or 1.03%, to 15,188.3.
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