Dow steps higher
Tentative buying, short covering boost blue chip index; Nasdaq falls again
By Staff Writer Catherine Tymkiw
April 4, 2001: 4:43 p.m. ET
NEW YORK (CNNfn) - The Dow Jones industrial average rose Wednesday as money moved tentatively into industrial issues, but traders, not investors, drove the activity as anxiety continued to grip sentiment.
The major indexes remained jumpy throughout the session, with the Dow flip-flopping in a 250-point range, as traders went bargain hunting and covered short positions, loosely defined as buying to offset a sell position in anticipation of prices moving higher.
The Dow Jones industrial average rose 29.71 to 9,515.42. It was both up and down by more than 1 percent during the course of the session. The blue chip index is down 18.8 percent from its high of 11,722 reached on Jan. 14, 2000.
The tech-heavy Nasdaq composite index set another 29-month low, almost a daily occurrence for the indicator. Investors remained skittish about corporate profit growth in a slowing economy and any hint of negativity kept them sidelined.
"The market is trying to adjust to all the pre-warnings," said Peter Coolidge, senior trader with Brean Murray & Co. "It's a dicey situation because the market is somewhat oversold and any buying is just met with selling pressure."
Technology stocks were pressured by marketplace rumors that telecom equipment maker Lucent Technologies (LU: down $1.07 to $6.78, Research, Estimates) as considering a bankruptcy filing. But the company emphatically denied the rumors, providing the impetus for the major indexes to regain some footing.
"Lucent was our scare today," said Coolidge. "It shows that the market is very skittish and vulnerable to any perceptions of bad news."
The Nasdaq composite index slid 34.20 to 1,638.80. The indicator is at levels it hasn't seen since mid-October 1998 and is down 67.5 percent from its March 10, 2000, high of 5,048.62. The Standard & Poor's 500 edged down 3.21 to 1,103.25 and is down 27.7 percent from its March 23, 2000, high of 1,527.
In a statement, Lucent called the bankruptcy rumors baseless and irresponsible. "We are already seeing positive impacts from our comprehensive restructuring program," said company Chief Financial Officer Deborah Hopkins.
"The ridiculous rumor about Lucent shook up some people," said Ned Riley, chief investment strategist with State Street Global Advisors. "But as a sign of the times, this type of rumor gains more credence and investors start fabricating most of the negative scenarios."
Market breadth was mixed. On the Nasdaq losers beat winners 2,231 to 1,487 as more than 2.41 billion shares were traded. Advancers outpaced decliners on the New York Stock Exchange 1,524 to 1,523 as more than 1.43 billion shares changed hands.
While the volume has been increasing, analysts said the gains don't necessarily signal a turnaround.
"Capitulation isn't a one-day phenomena," Ralph Acampora, chief technical strategist with Prudential Securities, told CNNfn's Street Sweep. "I'm in the camp that you have to get a wash-out and I'm telling investors to rotate ?the world doesn't revolve just around technology stocks."
In other markets, Treasury securities were mostly lower. The dollar slipped against both the euro and the yen.
Traders dominate the action
The major indexes have fallen to levels that create opportunities, analysts said, but investors weren't taking the bait. Most of the action remained in the hands of traders as the markets struggled to set a bottom point from which to launch.
"We don't need a cause and effect here," said Bryan Piskorowski, market analyst with Prudential Securities. "We have bear psychology gripping the market so there's general apathy toward taking positions -- rallies are viewed as short-lived and trader-oriented."
But investors might take some comfort from Goldman Sachs stock market
strategist Abby Joseph Cohen, who was quoted by Reuters as saying she still believes stocks are undervalued as measured by the Standard & Poor's 500 basket of stocks.
"We believe the decline in share prices ... has gone well beyond what the fundamentals suggest," Cohen told the World Economic Forum's U.S. meeting being held in Washington, D.C.
Much of the bad news about corporate outlooks has been priced into the market, and knee-jerk selling was expected to continue as the warnings are reported. The volatility was further fueled by the struggle to mark the end of the bottoming-out process.
"It's a conviction on the part of some that a lot of the stocks have reached such a downside level that they are discounting the worst of all scenarios," State Street's Riley said. "The enthusiasm is clearly restrained because the selling and anxiety continues so we've got a little short covering and selective buying."
Comments by Federal Reserve Chairman Alan Greenspan gave investors no clarity about monetary policy. But analysts say every time he speaks it puts investors on alert.
Greenspan said Wednesday that trade protectionist measures are unwise and not in the best interests of the United States. In remarks to a Senate panel, he did not mention the outlook for the U.S. economy or interest rates.
Select techs, industrials shine
Bargain hunters emerged for select tech and industrial issues. But analysts said traders were driving the churning action -- investors, they added, still are waiting for solid signs that things are getting better, not worse.
"From a technical standpoint the markets are a little oversold. There's tinder for the fire if the markets pick it up," Brett Gallagher, head of U.S. equities with Julius Baer, told CNNfn's Market Call. "Investors have to reconcile themselves that they're never going to find the bottom."
Commerce One (CMRC: up $0.39 to $6.00, Research, Estimates), the e-commerce software provider, bucked the selling trend despite warning its first-quarter loss will be wider than expected as customers delay information technology purchases and lengthen the sales cycle.
Other techs gaining included IBM (IBM: up $1.61 to $92.00, Research, Estimates), Yahoo! (YHOO: up $1.06 to $12.44, Research, Estimates) and Oracle (ORCL: up $0.41 to $13.66, Research, Estimates).
Industrial issues lifting the Dow included General Motors (GM: up $1.12 to $52.05, Research, Estimates), United Technologies (UTX: up $0.57 to $71.40, Research, Estimates) and Alcoa (AA: up $1.10 to $35.55, Research, Estimates).
Semis, financials falter
While market participants expect corporate warnings to continue weighing on investor sentiment, the major indexes have been beaten down to levels that may have created individual opportunities.
The leading sectors still taking a hit included the semiconductor space and financial stocks.
"There's just no conviction to get back in," said Art Hogan, chief market analyst with Jefferies & Co. "Right now we're in all-bad-news-all-the-time mode."
The top executive of National Semiconductor (NSM: down $2.03 to $22.17, Research, Estimates) said the current downturn in the chip industry may not yet have hit bottom.
COMDEX TECHNOLOGY CONFERENCE
Click below for the latest news from Comdex
Comdex
Brian Halla, National Semi's chairman and CEO, told reporters at the Comdex technology conference in Chicago Tuesday that a glut of inventory that has caused chipmakers to cut quarterly revenue and earnings targets may need another six-to-nine months to right itself.
The semiconductor sector faltered, with the Philadelphia semiconductor index sliding 27.17 points, or 5.5 percent, to 463.49.
Stocks in the chip sector getting hit included Applied Materials (AMAT: down $2.31 to $37.81, Research, Estimates), Intel (INTC: down $2.38 to $22.62, Research, Estimates) and KLA Tencor (KLAC: down $2.69 to $32.75, Research, Estimates).
There was also little good news for financial stocks. Decliners on the Dow included J.P. Morgan (JPM: down $0.77 to $40.49, Research, Estimates), American Express (AXP: down $1.71 to $36.20, Research, Estimates) and Citigroup (C: down $1.00 to $42.70, Research, Estimates).
Citigroup said it will be cutting several hundred jobs in its corporate and investment banking units to reflect the economic slowdown and the integration of recently acquired businesses.
In other financial news, insurance company American International Group (AIG: down $3.37 to $76.84, Research, Estimates) made an unsolicited $23 billion bid for American General (AGC: up $5.20 to $42.00, Research, Estimates), the financial services company that already has accepted an offer now valued at $20 billion from the British-based insurer Prudential.
Tentative buying, short covering boost blue chip index; Nasdaq falls again
By Staff Writer Catherine Tymkiw
April 4, 2001: 4:43 p.m. ET
NEW YORK (CNNfn) - The Dow Jones industrial average rose Wednesday as money moved tentatively into industrial issues, but traders, not investors, drove the activity as anxiety continued to grip sentiment.
The major indexes remained jumpy throughout the session, with the Dow flip-flopping in a 250-point range, as traders went bargain hunting and covered short positions, loosely defined as buying to offset a sell position in anticipation of prices moving higher.
The Dow Jones industrial average rose 29.71 to 9,515.42. It was both up and down by more than 1 percent during the course of the session. The blue chip index is down 18.8 percent from its high of 11,722 reached on Jan. 14, 2000.
The tech-heavy Nasdaq composite index set another 29-month low, almost a daily occurrence for the indicator. Investors remained skittish about corporate profit growth in a slowing economy and any hint of negativity kept them sidelined.
"The market is trying to adjust to all the pre-warnings," said Peter Coolidge, senior trader with Brean Murray & Co. "It's a dicey situation because the market is somewhat oversold and any buying is just met with selling pressure."
Technology stocks were pressured by marketplace rumors that telecom equipment maker Lucent Technologies (LU: down $1.07 to $6.78, Research, Estimates) as considering a bankruptcy filing. But the company emphatically denied the rumors, providing the impetus for the major indexes to regain some footing.
"Lucent was our scare today," said Coolidge. "It shows that the market is very skittish and vulnerable to any perceptions of bad news."
The Nasdaq composite index slid 34.20 to 1,638.80. The indicator is at levels it hasn't seen since mid-October 1998 and is down 67.5 percent from its March 10, 2000, high of 5,048.62. The Standard & Poor's 500 edged down 3.21 to 1,103.25 and is down 27.7 percent from its March 23, 2000, high of 1,527.
In a statement, Lucent called the bankruptcy rumors baseless and irresponsible. "We are already seeing positive impacts from our comprehensive restructuring program," said company Chief Financial Officer Deborah Hopkins.
"The ridiculous rumor about Lucent shook up some people," said Ned Riley, chief investment strategist with State Street Global Advisors. "But as a sign of the times, this type of rumor gains more credence and investors start fabricating most of the negative scenarios."
Market breadth was mixed. On the Nasdaq losers beat winners 2,231 to 1,487 as more than 2.41 billion shares were traded. Advancers outpaced decliners on the New York Stock Exchange 1,524 to 1,523 as more than 1.43 billion shares changed hands.
While the volume has been increasing, analysts said the gains don't necessarily signal a turnaround.
"Capitulation isn't a one-day phenomena," Ralph Acampora, chief technical strategist with Prudential Securities, told CNNfn's Street Sweep. "I'm in the camp that you have to get a wash-out and I'm telling investors to rotate ?the world doesn't revolve just around technology stocks."
In other markets, Treasury securities were mostly lower. The dollar slipped against both the euro and the yen.
Traders dominate the action
The major indexes have fallen to levels that create opportunities, analysts said, but investors weren't taking the bait. Most of the action remained in the hands of traders as the markets struggled to set a bottom point from which to launch.
"We don't need a cause and effect here," said Bryan Piskorowski, market analyst with Prudential Securities. "We have bear psychology gripping the market so there's general apathy toward taking positions -- rallies are viewed as short-lived and trader-oriented."
But investors might take some comfort from Goldman Sachs stock market
strategist Abby Joseph Cohen, who was quoted by Reuters as saying she still believes stocks are undervalued as measured by the Standard & Poor's 500 basket of stocks.
"We believe the decline in share prices ... has gone well beyond what the fundamentals suggest," Cohen told the World Economic Forum's U.S. meeting being held in Washington, D.C.
Much of the bad news about corporate outlooks has been priced into the market, and knee-jerk selling was expected to continue as the warnings are reported. The volatility was further fueled by the struggle to mark the end of the bottoming-out process.
"It's a conviction on the part of some that a lot of the stocks have reached such a downside level that they are discounting the worst of all scenarios," State Street's Riley said. "The enthusiasm is clearly restrained because the selling and anxiety continues so we've got a little short covering and selective buying."
Comments by Federal Reserve Chairman Alan Greenspan gave investors no clarity about monetary policy. But analysts say every time he speaks it puts investors on alert.
Greenspan said Wednesday that trade protectionist measures are unwise and not in the best interests of the United States. In remarks to a Senate panel, he did not mention the outlook for the U.S. economy or interest rates.
Select techs, industrials shine
Bargain hunters emerged for select tech and industrial issues. But analysts said traders were driving the churning action -- investors, they added, still are waiting for solid signs that things are getting better, not worse.
"From a technical standpoint the markets are a little oversold. There's tinder for the fire if the markets pick it up," Brett Gallagher, head of U.S. equities with Julius Baer, told CNNfn's Market Call. "Investors have to reconcile themselves that they're never going to find the bottom."
Commerce One (CMRC: up $0.39 to $6.00, Research, Estimates), the e-commerce software provider, bucked the selling trend despite warning its first-quarter loss will be wider than expected as customers delay information technology purchases and lengthen the sales cycle.
Other techs gaining included IBM (IBM: up $1.61 to $92.00, Research, Estimates), Yahoo! (YHOO: up $1.06 to $12.44, Research, Estimates) and Oracle (ORCL: up $0.41 to $13.66, Research, Estimates).
Industrial issues lifting the Dow included General Motors (GM: up $1.12 to $52.05, Research, Estimates), United Technologies (UTX: up $0.57 to $71.40, Research, Estimates) and Alcoa (AA: up $1.10 to $35.55, Research, Estimates).
Semis, financials falter
While market participants expect corporate warnings to continue weighing on investor sentiment, the major indexes have been beaten down to levels that may have created individual opportunities.
The leading sectors still taking a hit included the semiconductor space and financial stocks.
"There's just no conviction to get back in," said Art Hogan, chief market analyst with Jefferies & Co. "Right now we're in all-bad-news-all-the-time mode."
The top executive of National Semiconductor (NSM: down $2.03 to $22.17, Research, Estimates) said the current downturn in the chip industry may not yet have hit bottom.
COMDEX TECHNOLOGY CONFERENCE
Click below for the latest news from Comdex
Comdex
Brian Halla, National Semi's chairman and CEO, told reporters at the Comdex technology conference in Chicago Tuesday that a glut of inventory that has caused chipmakers to cut quarterly revenue and earnings targets may need another six-to-nine months to right itself.
The semiconductor sector faltered, with the Philadelphia semiconductor index sliding 27.17 points, or 5.5 percent, to 463.49.
Stocks in the chip sector getting hit included Applied Materials (AMAT: down $2.31 to $37.81, Research, Estimates), Intel (INTC: down $2.38 to $22.62, Research, Estimates) and KLA Tencor (KLAC: down $2.69 to $32.75, Research, Estimates).
There was also little good news for financial stocks. Decliners on the Dow included J.P. Morgan (JPM: down $0.77 to $40.49, Research, Estimates), American Express (AXP: down $1.71 to $36.20, Research, Estimates) and Citigroup (C: down $1.00 to $42.70, Research, Estimates).
Citigroup said it will be cutting several hundred jobs in its corporate and investment banking units to reflect the economic slowdown and the integration of recently acquired businesses.
In other financial news, insurance company American International Group (AIG: down $3.37 to $76.84, Research, Estimates) made an unsolicited $23 billion bid for American General (AGC: up $5.20 to $42.00, Research, Estimates), the financial services company that already has accepted an offer now valued at $20 billion from the British-based insurer Prudential.
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