U.S. shares fall on Motorola, Lucent outlooks
Enviado: 16/7/2003 18:35CBS MarketWatch
U.S. shares fall on Motorola, Lucent outlooks
Wednesday July 16, 1:17 pm ET
By Julie Rannazzisi
NEW YORK (CBS.MW) -- Negative news from Motorola and Lucent Technologies upstaged a rosy profit report from Intel, keeping U.S. stocks in the minus column on Wednesday.
Most market sectors dripped in red ink, with the heaviest losses suffered by networking, Internet and financial shares. But airlines issues took off after AMR posted better-than-expected results.
The Dow Jones Industrial Average (CBOT^DJINews) shaved 52 points, or 0.6 percent, to 9,076, held back by losses in Coca-Cola, SBC Communications and Citigroup, which announced the resignation of CEO Sandy Weill.
The Nasdaq Composite (NasdaqSC^IXICNews) fumbled 6 points, or 0.4 percent, to 1,746 and the Nasdaq 100 Index (NasdaqSC^NDXNews) forfeited 4 points, or 0.3 percent, to 1,289.
The Standard & Poor's 500 Index (CBOE^SPXNews) descended 0.7 percent and the Russell 2000 Index (CBOE^RUTNews) of small-capitalization stocks subtracted 0.7 percent.
Volume came in at 930 million on the NYSE and at 1.16 billion on the Nasdaq Stock Market. Losers defeated winners by 21 to 10 on the NYSE and by 19 to 11 on the Nasdaq.
CPI tame; production ekes out gain
The June consumer price index rose by an as-expected 0.2 percent while coming in flat at the core, which strips out the volatile food and energy components. Economists had expected a 0.1 percent increase in the core rate.
In the manufacturing sector, industrial production rose by an as-expected 0.1 percent in June -- the fastest pace since January. And capacity utilization came in as expected at 74.3 percent, revealing plenty of unused capacity in the nation's factories. and click on economic calendar and forecasts.
Finally, May business inventories fell 0.2 percent compared with expectations for a flat reading -- the first decline since April 2002.
Earnings onslaught continues
Intel (NasdaqNMINTCNews) tacked on 3.5 percent to breach a new 52-week high after posting late Tuesday second-quarter revenue and earnings-per-share that surpassed Wall Street's targets. For the third quarter, Intel projected revenue in the range of $6.9 billion and $7.5 billion, surrounding analysts' expectations of $7.15 billion.
J.P. Morgan told clients Wednesday it remains cautious on Intel despite its rosy results because of valuation and because there are still no signs of an increase information technology spending. But Bear Stearns hailed Intel's quarter and upped the blue chipper to an "outperform" rating from a "peer perform."
Throwing cold water on the tech sector was Motorola (NYSEMOTNews) , which slid 5.6 percent after offering a downbeat assessment of its third quarter late Tuesday. Still, the chip and handset firm reported a second-quarter profit from operations that bested expectations.
US Bancorp Piper Jaffray downgraded Motorola to a "market perform" rating from an "outperform" following the company's "challenging" second-half outlook while RCB Capital Markets cut shares to a "sector perform" from an "outperform." And UBS told clients that it does not believe Motorola can make a sustained move higher until visibility in its handset and semiconductor business improves.
Lucent Technologies' (NYSELUNews) near 12 percent slide hurt the networking sector after the company told investors late Tuesday that its third-quarter loss would be wider than expected as spending stalled in North America. The company also said it no longer expects to return to profitability in fiscal 2003, indicating that investors would have to wait until 2004 for black ink. Standard & Poor's placed Lucent's credit rating on "CreditWatch" with negative implications following the news.
In the storage sector, EMC (NYSEEMCNews) fumbled 7 percent as sellers took the stock down despite a better-than-expected profit in the company's second quarter. See story.
J.P. Morgan (NYSEJPMNews) was the only Dow components unveiling its second-quarter results before the opening bell. The banking giant's profit breezed past Wall Street's estimate, though shares shed 2.3 percent after opening on a higher note and briefly reaching a fresh 52-week high. See story.
Shares of automakers declined as Ford Motor (NYSEFNews) fell almost 5 percent after projecting a larger loss in the third quarter as it struggles with sluggish U.S. demand. In its second- quarter, Ford handily topped analysts' profit expectations. Rival and Dow component General Motors gave up 2.3 percent.
AMR Corp.'s (NYSEAMRNews) 6-percent ascent boosted the airline sector after the carrier registered a second-quarter loss that was much narrower compared with analysts' projections. See related story.
Read Movers & Shakers for the latest individual stock action.
Citi's Weill steps down
Dow stock Citigroup (NYSECNews) -- which checked in with a better-than-expected second quarter profit earlier in the week -- announced that Sandy Weill was stepping down as chief executive officer but would remain chairman until 2006. Charles Prince was named as his replacement. The stock fell 2.7 percent in recent exchanges.
In the meantime, Sears, Roebuck & Co. (NYSESNews) announced after the close Tuesday that it was unloading its credit and financial products businesses to Citi in a $6 billion cash deal that's expected to close by year-end. Sears surged over 10 percent.
Dow component McDonald's (NYSEMCDNews) relinquished 0.8 percent, though SG Cowen upped its third-quarter profit estimate on the fast food behemoth to reflect strong U.S. sales trends.
In analyst actions, Pfizer (NYSEPFENews) backpedaled 1.3 percent after Thomas Weisel Partners downgraded the drug kingpin to a "peer perform" rating from an "outperform," citing competitive threats to many of the company's brands, including Lipitor, Viagra and Diflucan.
On the other hand, Weisel upgraded Johnson & Johnson (NYSEJNJNews) to an "outperform" rating from a "peer perform" on belief the Dow component's risk profile has improved. Taking the opposite view, Bank of America Securities lowered J&J to a "neutral" rating and A.G. Edwards sliced the drugmaker to a "hold" from a "buy." Shares edged up 0.1 percent in recent trades.
Merrill Lynch (NYSEMERNews) saw its rating upped by J.P. Morgan to an "overweight" from "neutral" following its better-than-expected second-quarter results on Tuesday. Shares edged up 0.2 percent.
BEA Systems (NasdaqNMBEASNews) surged 7.1 percent after Merrill Lynch lifted the software company to a "buy" rating from a "neutral" and added the stock to its "Focus One" List.
In other news, Qualcomm (NasdaqNMQCOMNews) slipped 1.7 percent after raising its quarterly dividend by 40 percent.
Bonds recover as Greenspan clarifies
Treasury bonds recovered after getting shellacked on Tuesday in the biggest one-day rout in seven months that sent yields to 10-week highs.
On Wednesday, Fed chief Alan Greenspan testified on monetary policy and the economy before the Senate Banking Committee after speaking before a House panel on Tuesday.
Helping to buoy Treasurys were remarks from Greenspan indicating that he had not tossed out contingency plans to buy long-term Treasurys as a last-ditch effort to avert deflation. On Tuesday, fixed-income securities tumbled as investors felt the Fed would not resort to unconventional methods to prevent deflation.
The bellwether 10-year Treasury note climbed 1/32 to yield (CBOE^TNXNews) 3.975 percent while the 30-year government bond jumped 142/32 to yield (CBOE^TYXNews) 4.94 percent.
In the currency sector, the U.S. dollar was mixed against its major counterparts, adding 0.2 percent to 118.14 yen while the euro rose 0.3 percent to $1.1210.
Overnight, the Bank of Japan hoisted its view on the Japanese economy for the first time in a year, citing the more favorable environment for exports and improving business sentiment.
U.S. shares fall on Motorola, Lucent outlooks
Wednesday July 16, 1:17 pm ET
By Julie Rannazzisi
NEW YORK (CBS.MW) -- Negative news from Motorola and Lucent Technologies upstaged a rosy profit report from Intel, keeping U.S. stocks in the minus column on Wednesday.
Most market sectors dripped in red ink, with the heaviest losses suffered by networking, Internet and financial shares. But airlines issues took off after AMR posted better-than-expected results.
The Dow Jones Industrial Average (CBOT^DJINews) shaved 52 points, or 0.6 percent, to 9,076, held back by losses in Coca-Cola, SBC Communications and Citigroup, which announced the resignation of CEO Sandy Weill.
The Nasdaq Composite (NasdaqSC^IXICNews) fumbled 6 points, or 0.4 percent, to 1,746 and the Nasdaq 100 Index (NasdaqSC^NDXNews) forfeited 4 points, or 0.3 percent, to 1,289.
The Standard & Poor's 500 Index (CBOE^SPXNews) descended 0.7 percent and the Russell 2000 Index (CBOE^RUTNews) of small-capitalization stocks subtracted 0.7 percent.
Volume came in at 930 million on the NYSE and at 1.16 billion on the Nasdaq Stock Market. Losers defeated winners by 21 to 10 on the NYSE and by 19 to 11 on the Nasdaq.
CPI tame; production ekes out gain
The June consumer price index rose by an as-expected 0.2 percent while coming in flat at the core, which strips out the volatile food and energy components. Economists had expected a 0.1 percent increase in the core rate.
In the manufacturing sector, industrial production rose by an as-expected 0.1 percent in June -- the fastest pace since January. And capacity utilization came in as expected at 74.3 percent, revealing plenty of unused capacity in the nation's factories. and click on economic calendar and forecasts.
Finally, May business inventories fell 0.2 percent compared with expectations for a flat reading -- the first decline since April 2002.
Earnings onslaught continues
Intel (NasdaqNMINTCNews) tacked on 3.5 percent to breach a new 52-week high after posting late Tuesday second-quarter revenue and earnings-per-share that surpassed Wall Street's targets. For the third quarter, Intel projected revenue in the range of $6.9 billion and $7.5 billion, surrounding analysts' expectations of $7.15 billion.
J.P. Morgan told clients Wednesday it remains cautious on Intel despite its rosy results because of valuation and because there are still no signs of an increase information technology spending. But Bear Stearns hailed Intel's quarter and upped the blue chipper to an "outperform" rating from a "peer perform."
Throwing cold water on the tech sector was Motorola (NYSEMOTNews) , which slid 5.6 percent after offering a downbeat assessment of its third quarter late Tuesday. Still, the chip and handset firm reported a second-quarter profit from operations that bested expectations.
US Bancorp Piper Jaffray downgraded Motorola to a "market perform" rating from an "outperform" following the company's "challenging" second-half outlook while RCB Capital Markets cut shares to a "sector perform" from an "outperform." And UBS told clients that it does not believe Motorola can make a sustained move higher until visibility in its handset and semiconductor business improves.
Lucent Technologies' (NYSELUNews) near 12 percent slide hurt the networking sector after the company told investors late Tuesday that its third-quarter loss would be wider than expected as spending stalled in North America. The company also said it no longer expects to return to profitability in fiscal 2003, indicating that investors would have to wait until 2004 for black ink. Standard & Poor's placed Lucent's credit rating on "CreditWatch" with negative implications following the news.
In the storage sector, EMC (NYSEEMCNews) fumbled 7 percent as sellers took the stock down despite a better-than-expected profit in the company's second quarter. See story.
J.P. Morgan (NYSEJPMNews) was the only Dow components unveiling its second-quarter results before the opening bell. The banking giant's profit breezed past Wall Street's estimate, though shares shed 2.3 percent after opening on a higher note and briefly reaching a fresh 52-week high. See story.
Shares of automakers declined as Ford Motor (NYSEFNews) fell almost 5 percent after projecting a larger loss in the third quarter as it struggles with sluggish U.S. demand. In its second- quarter, Ford handily topped analysts' profit expectations. Rival and Dow component General Motors gave up 2.3 percent.
AMR Corp.'s (NYSEAMRNews) 6-percent ascent boosted the airline sector after the carrier registered a second-quarter loss that was much narrower compared with analysts' projections. See related story.
Read Movers & Shakers for the latest individual stock action.
Citi's Weill steps down
Dow stock Citigroup (NYSECNews) -- which checked in with a better-than-expected second quarter profit earlier in the week -- announced that Sandy Weill was stepping down as chief executive officer but would remain chairman until 2006. Charles Prince was named as his replacement. The stock fell 2.7 percent in recent exchanges.
In the meantime, Sears, Roebuck & Co. (NYSESNews) announced after the close Tuesday that it was unloading its credit and financial products businesses to Citi in a $6 billion cash deal that's expected to close by year-end. Sears surged over 10 percent.
Dow component McDonald's (NYSEMCDNews) relinquished 0.8 percent, though SG Cowen upped its third-quarter profit estimate on the fast food behemoth to reflect strong U.S. sales trends.
In analyst actions, Pfizer (NYSEPFENews) backpedaled 1.3 percent after Thomas Weisel Partners downgraded the drug kingpin to a "peer perform" rating from an "outperform," citing competitive threats to many of the company's brands, including Lipitor, Viagra and Diflucan.
On the other hand, Weisel upgraded Johnson & Johnson (NYSEJNJNews) to an "outperform" rating from a "peer perform" on belief the Dow component's risk profile has improved. Taking the opposite view, Bank of America Securities lowered J&J to a "neutral" rating and A.G. Edwards sliced the drugmaker to a "hold" from a "buy." Shares edged up 0.1 percent in recent trades.
Merrill Lynch (NYSEMERNews) saw its rating upped by J.P. Morgan to an "overweight" from "neutral" following its better-than-expected second-quarter results on Tuesday. Shares edged up 0.2 percent.
BEA Systems (NasdaqNMBEASNews) surged 7.1 percent after Merrill Lynch lifted the software company to a "buy" rating from a "neutral" and added the stock to its "Focus One" List.
In other news, Qualcomm (NasdaqNMQCOMNews) slipped 1.7 percent after raising its quarterly dividend by 40 percent.
Bonds recover as Greenspan clarifies
Treasury bonds recovered after getting shellacked on Tuesday in the biggest one-day rout in seven months that sent yields to 10-week highs.
On Wednesday, Fed chief Alan Greenspan testified on monetary policy and the economy before the Senate Banking Committee after speaking before a House panel on Tuesday.
Helping to buoy Treasurys were remarks from Greenspan indicating that he had not tossed out contingency plans to buy long-term Treasurys as a last-ditch effort to avert deflation. On Tuesday, fixed-income securities tumbled as investors felt the Fed would not resort to unconventional methods to prevent deflation.
The bellwether 10-year Treasury note climbed 1/32 to yield (CBOE^TNXNews) 3.975 percent while the 30-year government bond jumped 142/32 to yield (CBOE^TYXNews) 4.94 percent.
In the currency sector, the U.S. dollar was mixed against its major counterparts, adding 0.2 percent to 118.14 yen while the euro rose 0.3 percent to $1.1210.
Overnight, the Bank of Japan hoisted its view on the Japanese economy for the first time in a year, citing the more favorable environment for exports and improving business sentiment.