Weekoverzich en dagverloop 27 februari
- The market dug a pretty big hole for itself at the start of the week, and spent the rest of the week trying to pull itself out. With the (just barely) exception of the S&P 500 and Russell 2000, the indices were unable to do so, and the Nasdaq specifically finished with its sixth week of losses.
- The Composite's troubles weren't so much the fault of earnings news - pronouncements from Ingram Micro (IM), Marvell (MRVL), and Novellus (NVLS) were all encouraging - as it was the result of traders' anxieties surrounding the Nasdaq's recent deterioration. The Composite ended last week below its 50-day simple moving average, and was unable to stage a sustainable break above that level for all of this week. Traders stuck with the bearish trend at hand and sent groups like semiconductor, wireless, and software even lower. Within the software group, Oracle (ORCL) and PeopleSoft (PSFT) both fell after the Department of Justice filed a federal antitrust suit Thursday to block Oracle's hostile takeover of PeopleSoft
- As for the blue chip issues, they outperformed for the sixth consecutive week as investors continued to rotate into value-oriented names. Hospital, restaurant, tobacco, food distributor, and casino all led the market in part to their defensive attributes, and found retail also accompanying their moves thanks to a number of strong earnings reports from apparel names. Recent stand-outs homebuilding and oil & gas drillers also put up big moves. The latter benefited from the spike in crude oil to a new five-week high (at $36.16/bbl) on signs that US gasoline inventories will be insufficient to meet summer demand.
- Fed Chairman Greenspan had his own prognostications when he appeared in front of the House Budget Committee. Dr. Greenspan reiterated his 'growing concerns about the prospects of the federal deficit' and said that spending cuts - and not tax increases - were the best way to deal with it. The FOMC Chair ignited a political discussion by pinpointing Social Security and Medicare as the areas to rein in spending with the Baby Boom generation aging and placing 'enormous demands on our nation's resources.' Dr. Greenspan also called on Congress to impose tighter restrictions on Fannie Mae (FNM) and Freddie Mac (FRE) and their ability to issue debt.
- Other economic indicators were more rosy, and spoke to the economy's strengthening under the auspices of a resilient consumer and renewed business spending. Q1 GDP was revised up to 4.1% (consensus of 3.8%), February Michigan Consumer Sentiment was revised higher to 94.4 (consensus of 94.0), and the February Chicago PMI Index came in at 63.6 (consensus of 63.5). Economic data released earlier in the week fell short of the consensus expectations, but they did not play a prominent role in determining market direction.
- Looking to next week, the market will get the 'mother' of all economic reports: February employment on Friday. Other items that will help dictate the tone of trading will be Intel's (INTC) mid-quarter update after the close on Thursday, and the Bank of England/ECB's meetings before the open on Thursday. Speculation that the ECB would intervene or cut interest rates was behind the dollar's rally versus the euro this week.
- Briefing.com believes the market will trade in guarded fashion up until these events as buyers remain troubled by the indices' recent performance. The market has simply lost a lot of its momentum, and we continue to advise investors to maintain good exposure to conservative stocks.
- Close Dow +3.78 at 10583.92, Nasdaq -2.75 at 2029.82, S&P +0.03 at 1144.94: [BRIEFING.COM] The stock market couldn't decide which direction it wanted to trade today, and thus ended the session relatively unchanged... Today's economic reports provided a perfect impetus for an up move, yet the market held close to its recent bearish trend... The Nasdaq managed an early run near its 20 and 50-day simple moving averages, but was unable to penetrate those levels and headed south for most of the day... As a result, the Composite put up its sixth week of losses... The blue chip averages fared a bit better - with the S&P 500 finishing slightly higher for the week - although the Dow was not able to pare all of its weekly losses... As mentioned, today's economic data were all upbeat and topped their respective consensus estimates... Q1 GDP was revised higher to 4.1% (consensus of 3.8%), February Michigan Consumer Sentiment was revised up to 94.4 (consensus of 94.0), and the February Chicago PMI Index came in at 63.6 (consensus of 63.5)... The latter was off January's decade-high, but still showed strength across most of its components... The encouraging sign sent a number of economically-sensitive stocks - such as dept store - higher today... Losers in the session, though, were apparel, biotech, and semiconductor... SOX -1.5... NYSE Adv/Dec 2166/1105... Nasdaq Adv/Dec 1747/1424.
- 15:30 ET Bond Market Summary : Treasuries set new 5-week highs today on reassuring news of low inflation from Fed Gov Bernanke last night and today's GDP report. For the most part, economic releases sparked very little impact in treasuries today while volume rocketed on First Notice day for March 10-year futures contracts as positions wind-up rolling to June. Additional bid supported the market throughout the day as funds rebalanced their portfolios for month-end sending the tens through the 4% pivot, and are now ticking down to 3.975%, setting up a move to test January's 3.950%-3.970% key levels. Monday we look forward to ISM numbers and PPI at some point next week, both have the potential to send shockwaves through the market. The seeming disconnect from the dollar's tantrums may prove to be short lived as renewed chatter concerning euro-zone rates moves to the fore. Tens are currently +15/32nds yielding 3.975%; twos are +02/32nds yielding 1.641%; threes are +03/32nds yielding 2.107%; fives are +07/32nds yielding 2.938%; thirties are +31/32nds yielding 4.841%.
- 13:12 ET Schroeder says Bush made clear he is interested in a strong dollar -- Reuters :
- 12:38 ET Floor Talk : Market falls from highs of day as traders begin to exit ahead of the daily afternoon lull and in front of the weekend. Overall, a relatively quiet day on desks. Have heard several takeover rumors recirculated from the past week, but we don't think any of them merit mention. Hearing that a boutique firm is telling clients to own SAP (-0.56) going into Tuesday's analyst meeting despite the stock recently coming under pressure on speculation it could make its own play for PeopleSoft. However, after checking around on this, not hearing much buzz about a deal happening.
- 09:00 ET Gold Oil and Dollar Summary : The Dollar gives back some of its earlier gains on the Euro (1.2422) after a better than expected Q1 GDP revision. Little to no reaction is expected to emerge from German Chancellor Schroeder meeting with President Bush today to discuss the Euro's strength and interest rates, particularly as the
US 35.54 a barrel. With petro reserves at its lowest in years and OPEC meeting March 31 to discuss production cuts, oil prices have been on the rise as of late. - 07:24 ET CSCO: Cisco says spending is slow and steady - Reuters : Reuters reports that a top executive at Cisco Systems (CSCO) said on Thursday its customers are more confident but still careful about their spending on technology. "While there is optimism there, you are also seeing a slow and steady progress as opposed to an immediate ramp-up to a level I think some people were expecting," CFO Dennis Powell said. "Our customers today are more optimistic than they were, say, six months ago or even a quarter ago. Having said that, as they look at what they're going to be doing on the spending side, they are going to be very disciplined about the amount of spending that they allow to occur," Powell said at the Reuters Technology, Media and Telecommunications Summit in
New York
Guy Boscart,