Brokerages and computer box makers are under pressure. These sectors, along with a downgrade of
, were keeping the major indices in the negative today.
With the announcement that
plans to purchase
, the takeover juice has now been squeezed out of the brokerage names, and they're dropping.
Dow Jones Industrial Average was lately off 84.72, or 0.75%, to 11,148.80; the
S&P 500 dropped 4.73, or 0.32%, to 1477.26, and the
Nasdaq Composite Index shed 2.5, or 0.06%, to 3847.0. The small-cap
Russell 2000 dropped 1.22 to 531.21.
TheStreet.com Internet Sector
, or the
DOT index was up 0.1 to 793.3.
Both the Dow and the Nasdaq are feeling the impact of Intel's losses. The company was downgraded, along with fellow semiconductor maker
Advanced Micro Devices
Banc of America Securities
analyst Richard Whittington. He broadly cited concerns about demand from PC makers and Intel's delivery problems. Intel was lately down 4.5%, while AMD lost 6.6%.
Money managers are regarding Intel and AMD's woes as stock specific today -- the
Philadelphia Stock Exchange Semiconductor Index
was lately up 0.4%. But chip stocks have come under fire from a number of analysts in recent weeks. They are worried about strength in demand, low prices for DRAM, which is a commodity chip, and the ability of manufacturers to meet current demand.
"Semiconductors have been on the defensive the last couple of weeks, and they're trying to make a stand here, but there's still some pressure on the group," said Scott Curtis, trader at
Concerns over weakening PC demand are being highlighted this morning by the earnings
warning from electronic components maker
, which said fiscal first-quarter profits would be lower than expected due to diminished demand. SCI is one of the
New York Stock Exchange's biggest losers today, dropping $11.38, or 20.3%, to $44.69.
Philadelphia Stock Exchange Computer Box Maker Index
is down 0.4%, with the biggest losses coming from SCI's two largest PC
, down 3.6%, and
, off 3.8%.
Big deals, lower prices
After a hefty round of consolidation that culminated with today's Chase-J.P. Morgan announcement, the brokerage stocks are sagging today. There's a sense among traders that the wave of
consolidation may be nearing an end, unless a European player comes in to purchase another brokerage firm. The latest merger is designed to enhance Chase's
clout against other recently announced combinations.
If consolidation among bulge-bracket firms dies down, the sense is that these stocks are overvalued.
"They've all been running, and nobody quite knew who would be in play," said Curtis. "J.P. Morgan was the cheapest on a valuation basis."
Other firms considered takeover plays include
, down 3%, and
, which is off 3.7%. J.P. Morgan itself is down today, losing 3.7%.
"There's the risk inherent in the pricing," said Roseanne Lang, vice president of program trading at
. "They've just been priced so high and they're speculative at best in terms of the pricing of these deals."
was flying, up 20.8%, on speculation that the market maker could be
Morgan Stanley Dean Witter
. The company is the largest independent market maker out there, with two of its large competitors recently being snapped up by larger firms, including
announced purchase of
Spear Leeds & Kellogg
Breadth was mixed on moderate volume.
New York Stock Exchange: 1,286 advancers, 1,355 decliners, 573.5 million shares. 114 new 52-week highs, 34 new lows.
Nasdaq Stock Market: 1,610 advancers, 2,048 decliners, 887 million shares. 56 new highs, 65 new lows.
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Most Active Stocks
NYSE Most Actives
- Chase Manhattan: 28.5 million shares.
Lucent (LU) : 17.5 million shares.
Nortel (NT) : 17.1 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Cisco Systems, Inc. Report: 43.1 million shares.
Intel: 40.3 million shares.
Knight Trading: 31.3 million shares.
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Transportation stocks were having a strong day. The
Dow Jones Transportation Average
rose 1.3%, and the
Amex Stock Exchange Airline Index
gained 2.2%. The
Dow Jones Utility Average
hit a new all-time high of 400.06 today, and was still strong lately, up 1.98 to 397.24, as investors continue to buy these stocks. Crude oil has dropped a bit from its recent high, lately at $34.25.
Diversified manufacturers were coming under a bit of pressure today.
was dropping, losing 1%, and
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Bond prices are higher, but not as high as they were earlier in the session. As oil and stocks have moved off their lows of the day, Treasuries have given back some of their gains. Treasury traders are also paying close attention to the corporate bond market, where more than usual new issues are competing for investor dollars.
Meanwhile, while there is no major economic news today,
fed funds futures are discounting lower odds than ever that the
Fed will hike interest rates again this year. The December fed funds contract is putting the odds of a hike in the rate to 6.75% from 6.5% currently at just 5%, down from 21% yesterday.
The benchmark 10-year Treasury note, up as much as 9/32 earlier, lately was up 7/32 at 100, dropping its yield to 5.749%.
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Techs and telecoms were a drag on
European markets today. The
closed down 77.30 to 6478.20. Across the channel, the
in Paris ended off 128.91 to 6568.89, and the
in Frankfurt was off 130.86 to 7004.89.
The embattled euro was lately trading at $0.8640 amid rumors that the
would intervene to prop up the currency. The rumors were denied.
Tokyo stocks rose overnight after two days of losses, while markets in Korea and Hong Kong were closed for a national holiday.
Japanese shares climbed higher after mutual and pension fund managers vigorously picked up selected technology shares in an otherwise lethargic trading day. The
index rose 150.29 to close at 16,190.52.
The greenback slowly inched higher against the yen and closed at 106.97 in Tokyo trading. The dollar was lately trading at 106.98 yen.
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