Today's Market: Stocks Mixed and Little Changed at Midday Ahead of Tomorrow's Greenspan Speech

The market -- distracted by a ton of earnings -- has been directionless most of the day.
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Cautious traders spent more time poring over the 19 billion earnings announcements from last night and this morning than they did at the desk making big moves. For the third day in a row, markets were not volatile and stayed downright tranquil as speculation about next week's

Federal Reserve meeting continues to hog the spotlight.

Moreover, all eyes are on Fed chief

Alan Greenspan, who will address the

Senate Finance Committee

tomorrow in a speech that will likely set the tone for the semiannual

Humphrey-Hawkins

testimony. The Hawkins testimony will be delivered in late February, when older, crotchety members of Congress get to grill the Fed chief about the state of the American economy. Themes that are put forth in Greenspan's testimony usually show up in earlier Greenspan addresses, so markets will be paying close attention.

Additionally, a smorgasbord of economic data come out tomorrow, with

initial jobless claims, the fourth-quarter

employment cost index and December

existing home sales all released for market scrutiny. So with minds firmly focused on the future, the present condition wasn't exactly drawing top billing, with indices drifting into the green on merely moderate volume.

Both the

Dow Jones Industrial Average and

Nasdaq Composite Index were little changed, despite a bunch of lackluster earnings from companies who either matched lowered estimates or missed them entirely. Much of the earnings news wasn't walloping stocks, since investors had priced in difficulties during the record-breaking fourth-quarter confessional season, according to

I/B/E/S

.

The Dow was down 8 to 10,641, pulled higher by

Microsoft

(MSFT) - Get Report

and pushed lower by

3M

(MMM) - Get Report

. For those of you keeping score at home, five blue-chips released earnings since the market closed yesterday --

DuPont

(DD) - Get Report

,

International Paper

(IP) - Get Report

,

McDonald's

(MCD) - Get Report

,

3M

(MMM) - Get Report

and

ExxonMobil

(XOM) - Get Report

. Here's a quick look:

  • DuPont was hurt by rising energy costs, while warning of a tough 2001, beating a lowered Wall Street estimate, but driving home the point that it was not out of the woods yet. Revenues fell by almost $1.5 billion from the previous year.
  • International Paper was also adversely affected by energy prices and a slowing economy, missing lowered analyst expectations by 2 cents.
  • McDonald's missed the First Call/Thomson Financial estimate of 35 cents a share, coming in with a 34-cent profit, with net income dropping from the year-ago $486.2 million to the current $452 million. Public concern over Mad Cow Disease was blamed on sluggish European sales, a problem which McDonald's said will not affect sales outside of Europe.
  • 3M, after warning last week that its earnings would miss the $1.20 per share analyst estimate, announced earnings of $1.12 a share. Net income was unchanged from the previous year, not something investors wanted to hear from a company whose stock gained 23% last year.
  • ExxonMobil was the lone winner of the bunch, banging out huge profits on those high energy costs that have plagued other Dow components. ExxonMobil announced earnings of $1.46 a share. Analysts were only looking for $1.31 a share.

DuPont, McDonald's, ExxonMobil and 3M were all on the downside, while International Paper was eking out a slight gain, only driving home the point that investors weren't making moves based on fourth-quarter earnings results.

Not hurting Mister Softee was the announcement that Microsoft and

Sun Microsystems

(SUNW) - Get Report

had buried the legal hatchet and settled a three-year-old lawsuit over Sun's Java technology. Per the settlement, Microsoft pays Sun a lump sum of $20 million for use of Java over the next seven years. The news was seen as great for both parties, since they'd avoid continuing a battle that would only get more protracted and costly. Microsoft rose 3.7% to $62.75, while Sun rose 4.2% to $32.88.

Elsewhere in tech,

Compaq

(CPQ)

came in and topped lowered estimates, but provided 2001 guidance that had it meeting earnings per share estimates, despite the fact that it also said revenues would be lower-than-expected. The pivotal question is --

how exactly is Compaq going to do that? Compaq rallied anyway, gaining 11% to $22.26.

The car wreck of a company known as

Lucent

(LU)

continued to

flip end-over-end, announcing a massive seven-point restructuring plan that will eliminate 10,000 jobs after it came in three cents lower than already lowered expectations. Trouble loves Lucent. Investors love companies that take action to avoid it. Lucent rose 5% to $19.75.

Broadcom

(BRCM)

beat estimates by 3 cents with next quarter revenue coming in 22% to 23% higher. Broadcom, which has ramped up more than $40 in the last three weeks, was off 4.1% cents to $128.

Tech names were back in good graces, and so was the Comp. Biotechs, disk drive peripherals, large-cap tech and even dot coms, were drawing a lot of positive attention. The

TheStreet.com Internet Sector Index

was one of the best sectors, gaining 3%, while the

American Stock Exchange Disk Drive Index

gained 3.1%.

Market Internals

Winner beat losers. What else do you want?

New York Stock Exchange: 1,401 advancers, 1,294 decliners, 709 million shares. 91 new 52-week highs, 5 new lows.

Nasdaq Stock Market: 2,006 advancers, 1,555 decliners, 1.409 billion shares. 65 new highs, 6 new lows.

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Most Active Stocks

NYSE Most Actives

  • Lucent (LU) : 33.6 million shares.
  • Compaq (CPQ) : 22.2 million shares.
  • AOL Time Warner (AOL) : 20 million shares.

Nasdaq Most Actives

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Sector Watch

The

American Stock Exchange Pharmaceutical Index

was down 1.4%, after

Pfizer

(PFE) - Get Report

and

Bristol-Myers Squibb

(BMY) - Get Report

reported earnings. Pfizer's results came in-line with estimates and said it saw double-digit revenue growth continuing in 2001. Bristol-Myers came in with earnings of 59 cents a share, topping the analyst estimates by a penny.

Even though Bristol-Myers beat estimates, the Street was looking like it was expecting more. The stock even got an upgrade to buy from accumulate at

Merrill Lynch

, but it didn't help. The stock was off 3.7% to $63.81.

The same thing happened Tuesday to

Merck

(MRK) - Get Report

. The stock fell despite posting better-than-expected earnings. This morning, Merck got an upgrade to strong buy from

SG Cowen

, but it, too, was off 0.7% to $79 in recent trading.

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Bonds/Economy

Treasuries are still feeling the effects of yesterday's news story that suggested a moderate rather than drastic cut in interest rates at the end of this month. Selloffs continued overnight in the shorter-term securities, which derive greater benefit in a falling rate environment. With mortgage rates remaining at low levels, the latest housing data indicates fairly active refinancing. This is not much news to the money market, which is really getting set for tomorrow when

Federal Reserve chairman

Alan Greenspan will address the Senate Finance Committee, and key employment cost data will be out. For now, trading remains quiet and there is little movement in yields.

The benchmark 10-year

Treasury note lately was unchanged at 103 15/32, its yield at 5.283%.

In economic news, the

Mortgage Applications Survey

(

definition |

chart |

source

) perceived a slight decrease in new mortgage activity as the Purchase Index slipped to 332.6 in the week ending Jan.19 from 332.9 the previous week. The Refinancing Index remained robust at 2123.3 for the same period, though it is down from 2800.6. Homeowners continue to take advantage of lower mortgage rates to seek better terms. They may also, as happened during the last refinancing boom of 1998-99, use the excess liquidity to make purchases in other consumer sectors, and thus shore up the economy.

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International

British eyes were smiling toward the end of the trading day, with a massive tech rally boosting the

FTSE

, which followed yesterday's late-day strength in the States and a rather mild morning. Both the

Dow Jones Industrial Average and

Nasdaq Composite Index finished yesterday at session highs and were in the green for much of today's trading. London's FTSE was up 80.40 to 6295.10, pushed higher by

Vodafone

. Paris'

CAC

rose 52.59 to 5897.32, while Germany's

Xetra Dax

dipped 17.22 to 6739.63.

The euro, once a puny 98-pound weakling, won't let anyone kick sand in its face anymore. Not after rebounding from scary lows in November and December while pushing towards parity with the dollar again. It last traded at $0.9292. Chuck Atlas would be proud.

Asian markets did not get any such boost from American strength, however. Tokyo's

Nikkei

dropped 91.08 to 13,893.58. Traders were selling stocks and taking profits after the market ran up to the 14,000 level. Hong Kong's

Hang Seng

fell 55.06 to 16,044.21.

The yen fell against the dollar after a newswire reported that Lawrence Lindsey, economic adviser to President

George W. Bush

, said the U.S. would favor a weaker yen. Lindsey had said in talks with Japanese officials last week that the U.S. would tolerate the yen at 120 per dollar. The greenback was lately trading at 118.18 yen.

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