Today's Market: Welcome Back Buyers! Tech's Been Waiting for You

<LI>Chip stocks rocket higher.</LI> <LI>IBM rises ahead of its earnings report.</LI> <LI>3M drops on news it will miss earnings targets.</LI>
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Ever given your credit card to a college student? Ever work in human resources for the New York Yankees? Ever attend a Filene's Basement one-day sale?

If so, then you know what markets were looking like at midday. People were furiously buying stocks and lifting the troubled technology sector. They were shunning commodity-related stocks. The

Nasdaq Composite Index was up almost 5%, while the

Dow Jones Industrial Average was in the green.

A quick look at market internals drives home this point. On the

New York Stock Exchange, 1,647 issues were positive while only 1,078 were negative. That's on 680.7 million shares volume, which is a pretty good clip for the Big Board. But the Nasdaq Stock Market was even better than that. Winners beat losers by a better-than-2-to-1 margin on volume in excess of 1 billion shares traded, quite a reversal from the doldrums of December and November, where anemic volume and heavy selling sent markets stumbling into the new year.

Wall Street was awash in news this morning, after a flock of blue-chips reported earnings and the latest

Consumer Price Index report was released. Between all the press releases, forward-thinking statements and subsequent analyst actions, it could be quite difficult to sort out who did what in which quarter and why or how it all happened.

So don't worry about it. Here's a quick roundup in alphabetical order:

  • 3M (MMM) - Get Report said that it will miss estimates when it officially releases the results of its fourth-quarter sometime next week. Earnings will come in at $1.12 a share, lower than the $1.20 estimate of analysts polled by earnings tracker First Call/Thomson Financial. The company said it would be restructuring in order to cut costs.
  • Boeing (BA) - Get Report announced fourth-quarter earnings of $1.01 a share, topping the 91-cent First Call estimate and the year-ago 74 cents. The full-year picture was also quite good, with the plane maker cruising in at $2.88 a share, better than the $2.75 estimate.
  • Eastman Kodak's (EK) troubles continue. The Rochester, N.Y.,-based company announced that fourth-quarter earnings, excluding all items, came in at 68 cents a share, close to half of last year's quarter -- $1.27 a share. The analysts expected Kodak to come in at 68 cents a share, but really, that's after the company lowered estimates in December, which was the second time in three months it had to do so. Across the board, sliding sales can be blamed for the disappointing quarter.
  • General Electric (GE) - Get Report finished in-line with Wall Street's expectations, announcing earnings of 36 cents a share. It was relatively unchanged on the news, trading to the downside.
  • General Motors (GM) - Get Report beat analyst estimates by three cents, but fell way short of its year-ago performance, producing a mixed-bag earnings report. This doesn't really help considering GM's recent efforts to control costs in a declining sales environment. Just a few weeks ago, the company said it was killing off its Oldsmobile brand, crushing the spirits of octogenarians everywhere. Like GE, it was relatively unchanged by the news, sliding to the upside.
  • Home Depot (HD) - Get Report was cut to hold from strong buy at Prudential Securities. Not that many people cared. The Depot was off a mere 2%.
  • IBM (IBM) - Get Report will report fourth-quarter earnings after the bell this evening. So keep an eye out for those numbers, especially the revenue figures. As TheStreet.com reported earlier, sales will be a key indicator of Big Blue's fortunes since an earnings miss is highly unlikely. Last quarter, IBM beat earnings estimates, but missed sales estimates -- and investors beat the stock down in following sessions. Ahead of that, IBM was up 4.9%.
  • Intel (INTC) - Get Report beat lowered expectations last night, and then saw its 2001 earnings per share estimates clipped at a veritable who's who of brokerage houses. Goldman Sachs, Prudential Securities, Merrill Lynch and Credit Suisse First Boston all trimmed back their expectations.
  • J.P. Morgan Chase (JPM) - Get Report missed analyst estimates by a bunch, coming in at 37 cents a share vs. the expected 45 cents a share. But investors took the news in stride, since this loss is right in line with company guidance issued in December. Blamed for the loss? A slowdown in underwriting and capital market activity.

3M's earnings miss weighed heaviest on the Dow, as did healthcare names

Merck

(MRK) - Get Report

and

Johnson & Johnson

(JNJ) - Get Report

. But a rally in technology stocks ahead of IBM's earnings really helped shore up the losses.

Hewlett-Packard

(HWP)

, Intel,

Microsoft

(MSFT) - Get Report

and

United Technologies

were all winners.

That happy-go-techie vibe carried over into the Nasdaq, which has its fair share of tech related names. Chipmakers, dot-coms and networkers were three of the best sectors.

The

Philadelphia Stock Exchange Semiconductor Index

gained 10%, tracking higher on news from a company that isn't even part of the index --

Applied Micro Circuits

(AMCC)

. Last night, Applied Micro Circuits announced third-quarter earnings of 16 cents a share, topping estimates by two cents and crushing last year's five cents a share.

Novellus Systems

(NVLS)

was also in the plus column, announcing earnings of 76 cents a share, better than estimates.

The sector shot up on the good news, shaking off bad news from

Teradyne

(TER) - Get Report

, which warned that fourth-quarter earnings will miss estimates, while the first-quarter will be weaker.

Still, it's worth noting that semiconductors aren't out of the woods yet. As mentioned earlier, Intel's 2001 earnings forecast was downgraded by a bunch of brokerages on fears slowing tech spending will continue to pressure profitability.

The Web isn't completely dead yet, despite the carcasses littered all over the Internet superhighway.

eBay

(EBAY) - Get Report

was upgraded to buy from market perform over at

SG Cowen

, while

Yahoo!

(YHOO)

rampaged 12.3% higher, despite last week's warning about earnings. The fully approved

AOL Time Warner

(AOL)

continued to rocket higher. Today it rose 4.8%. That's a gain of over 50% from the end of trading on Jan. 2.

Net result:

TheStreet.com Internet Sector Index

gains 5.6%.

Now U C the CPI

December's

Consumer Price Index, which gauges price changes in consumer goods, came in this morning right in line with economists' forecast at 0.2%. The core number, which excludes volatile energy and food prices, dipped 0.1%, just below forecasts of 0.2%. In November, the headline CPI rose 0.2%, while the core number rose 0.3%. The numbers seem to be reassuring the market that inflation is under control

Still,

industrial production fell 0.6% in December, compared with forecasts of 0.5% -- one of the weakest reports in years. Capacity utilization, which measures how much of the country's production capacity is being used, fell to 80.6%, just below forecasts of 80.9% and the previous month's 81.6%.

Market Internals

Like Mom always said, it's what's on the inside that counts. Internals were good. Volume was very heavy for this hour. Keep an eye out -- this could be another record breaker.

New York Stock Exchange: 1,647 advancers, 1,078 decliners, 680.7 million shares. 116 new 52-week highs, 9 new lows.

Nasdaq Stock Market: 2,587 advancers, 1,082 decliners, 1.5 billion shares. 100 new highs, 8 new lows.

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Most Active Stocks

NYSE Most Actives

  • Nortel (NT) : 23.7 million shares.
  • General Electric (GE) - Get Report: 14.6 million shares.
  • Lucent (LU) : 13.9 million shares.

Nasdaq Most Actives

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Sector Watch

Tech was a great place to be today as bargain hunters lift the battered. In addition to the dot-coms and chip-related stocks, networkers, telecommunications and boxmakers were much higher. Overall, large-cap technology was doing well -- which includes some of the biggest names on the Nasdaq, like Microsoft,

Sun Microsystems

(SUNW) - Get Report

and Cisco.

The

Morgan Stanley High-Technology 35 Index

, which tracks the big guys, was up 6%. The

American Stock Exchange Networking Index

was up 6.5%.

Someone should probably tell the brokers that J.P. Morgan Chase released some disappointing earnings, because nobody was paying much attention. Despite the miss from one of Wall Street's biggest brokers, the

American Stock Exchange Securities Broker/Dealer Index

rose 2.7%.

Oil-related stocks suffered after OPEC cut its output by 1.5 million barrels a day in order to prop up the price of oil, which has slipped well off its ten-year high of $35 reached in October. The

Philadelphia Stock Exchange Oil Service Index

was hit hardest, falling 4%. The

American Stock Exchange Natural Gas Index

and

American Stock Exchange Oil Index

were off more than 1%.

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Bonds/Economy

Treasuries have begun to trade higher as the markets digests a sizeable amount of commercial data released this morning, with the pricing on the long bond especially strong. Although the latest information came out variously mixed, the overall message remains unchanged from that of recent weeks - the weakening economy will need active support from the

Federal Reserve.

The benchmark 10-year

Treasury notelately was up 18/32 to 104 14/32, lowering its yield to 5.160.

In economic news, the

Consumer Price Index

(

definition |

chart |

source

), which measures the prices paid for goods and services, provided fresh evidence that a tepid inflation rate is not the problem.

The core CPI, which measures the prices of goods and services excluding food and energy, whose prices are volatile, rose 0.2% in December, in line with the expectations of economists polled by

Reuters

. The annual growth rate of the core CPI remained at 2.6%, its peak level of the year.

Consumer prices of all goods and services, including food and energy, rose 0.2% in December, while its annual rate of increase held steady at 3.4%.

The weekly

Mortgage Applications Survey

(

definition |

chart |

source

) detected increases in refinancing and new mortgage activity, as mortgage interest rates remained low. The Refinancing Index rose to 2800.6, the highest since Oct. 1998, from 1572.1. It has now almost doubled in value for two successive weeks. The Purchase Index rose to 332.9 from 292.8, continuing its upward trend over the last four weeks.

The

BTM-UBSW Weekly Chain Store Sales Index

(

definition |

chart ) fell 0.3%, after having risen for four consecutive weeks. Its change from the same period twelve months ago fell to 4.9% from 5.7%, but remains relatively strong. The

Redbook Retail Average

(

definition |

chart ) found this month that sales after two weeks are running 2.6% ahead of December. Sales in January rose by 3.6% compared to a year ago.

Industrial production

(

definition |

chart |

source

) fell 0.6% in December. The reading is slightly higher than expectations. Economists had predicted a slide of 0.5%. It is the third consecutive decline and confirms, yet again, the cooling in the economy.

As production fell, the capacity utilization rate, which measures anti-inflationary slack in the industrial sector of the economy, fell to 80.6%, the lowest since Sept. 1992.

Finally,

real earnings

(

definition |

chart |

source

) fell 0.4% in December after having remained unchanged during the previous month.

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International

European markets followed America higher toward the end of their trading day.

London's

FTSE

soared 114.1 to 6197.4. Across the channel, Paris'

CAC-40

gained 122.4 to 5884.1, while Frankfurt's

Xetra Dax

was up 138.4 to 6641.3.

The euro was tumbling, down to $0.9332 this morning. It has been gaining slowly in the past few weeks as the U.S. dollar weakens in the face of a slowing domestic economy.

Asian markets were mixed overnight.

Tokyo's key

Nikkei 225

index rose for a fourth straight session after hitting a 27-month low last Thursday. The index, lead higher by banking shares, closed up 83.18, or 0.61%, to 13,667.63.

Losses in Chinese shares pressured the Hong Kong stock market lower Wednesday after Chinese Premier Zhu Rongji supported a crackdown on stock market manipulation. The key

Hang Seng

index closed down 101.67, or 0.66%, to 15,261.48.

The greenback was lately rising against the yen, trading at 118.015 yen.

For more on world stock markets, check out

TheStreet.com's

global indices information.

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