S&P 500 1,125.38 -.80%
U.S. indices finished modestly lower last week on weakness in technology and retail shares. Stocks fell slightly on Monday after the early handover of power to Iraq failed to generate buying enthusiasm ahead of the Fed rate-hike and employment report. Stocks rallied mid-week on a much stronger-than-expected consumer confidence report and diminishing inflation fears after the Fed raised rates. The week ended on a weaker note as rising energy prices, concerns over technology earnings and a weaker-than-expected jobs report spurred profit-taking.
There were several notable movers last week. Shares of Research in Motion(RIMM) gained 16.8% after the company raised its forecasts for profit and sales growth this quarter. Electro Scientific(ESIO) rose 23.8% after it said sales in the fourth quarter more than tripled from a year earlier. Washington Mutual(WM) fell 7.1% after the company slashed its 2004 profit forecast because customers are cutting back on home loans. Kmart(KMRT) increased 5.2% after saying it will sell as many as 54 store to Sears for about $621 million. Gtech Holdings(GTK) dropped 16.1% after the company cut its fiscal second-quarter and 2005 profit forecasts because a judge in Brazil withheld revenue. AutoZone(AZO) declined 12.2% after saying sales at stores open more than a year fell 1% in the first seven weeks of the fiscal fourth quarter and retail same-store sales fell 3%. Target Corporation(TGT) fell 6.1% after saying June sales will be "well below" its expectations. Shares of Cardinal Health(CAH) fell 24.9% after saying 2004 profit missed forecasts and its accounting is being probed by federal prosecutors. Emulex(ELX) plunged 48.2% after saying fiscal fourth-quarter profit and sales were less than forecast. Finally, Mamma.com(MAMA) dropped 15.9% after it was reported that Mark Cuban sold his 9.2% stake.
Bottom Line: Investor psychology, while improving, is still overly pessimistic. Just a week ago Thomson First Call said positive-to-negative earnings pre-announcements were running at a record high. However, a few bad reports last week sent entire sectors reeling. Moreover, technology investors continue to view the glass as half empty. However, I expect technology companies to exceed expectations for the third and fourth quarters. The continuing declines in the CRB Index and interest rates point to an abatement in inflation fears which is a very positive development. Higher interest rates and inflation have been the bears' main arguments for lower stock prices. While Target, Wal-Mart and some auto-makers recently reported disappointing sales forecasts, lower interest rates and higher consumer confidence should result in another strong sales spurt in the next few months. Unfortunately for the bulls, the handover of power to Iraq, a break-out in consumer confidence and lower interest rates could not push stocks higher. A failure by stocks to move higher in the coming week will likely result in a continuation of the current trading range for longer than I had anticipated.
Monday, July 05, 2004
Saturday, July 03, 2004
Economic Week in Review
ECRI Weekly Leading Index 131.50 -.60%
Personal Income for May rose .6% versus expectations of a .5% rise and a .6% rise in April. Personal Spending for May rose 1.0%, the largest increase since October of 2001, versus estimates of a .8% rise and a .2% rise in April. The PCE Core Index, Greenspan's favorite measure of inflation, rose 1.6% year-over-year. Rising incomes reflect an economy that has created 1.3 million jobs this year, Bloomberg said. "We're very optimistic," said Tom Golisano, CEO of Paychex, a provider of payroll and employee-benefit services.
The Conference Board's Consumer Confidence Index for June rose to 101.9, the highest level in two years, versus expectations of 95.0 and a reading of 93.1 in May. Job gains, wage increases, improvements in Iraq and falling gas prices spurred confidence, Bloomberg said. The percentage of consumers that said they saw jobs as hard to find was the lowest since 2002. "Money in your pocket speaks the loudest," said Ellen Beeson, an economist at Bank of Tokyo-Mitsubishi. "Consumer perceptions of the labor market have finally caught up to reality and are outweighing concerns over Iraq and energy prices." Moreover, gasoline prices have fallen for five straight weeks, bolstering consumer attitudes, Bloomberg reported. "Leisure travel is very strong, and business travel is steadily getting better," said Thomas Parrington, CEO of Lodgian, an owner of 88 hotels. Finally, the survey showed the percentage of people planning to buy a major appliance in the next six months rose to 33.7, the highest in 6 years.
The Chicago Purchasing Manager Index fell to 56.4 in June versus expectations of 65.0 and a reading of 68.0 in May. The index had reached a 16-year high in May. "You can't accelerate forever once you hit your top speed," said Kevin Logan, a senior market economist at Dresdner Kleinwort Wasserstein. "We are still in growth mode, but the intensity of the pick-up is slowing down." A reading greater than 50 signals growth and the index has averaged 62.6 so far this year, one of the best averages on record, Bloomberg reported.
Federal Reserve policy makers raised the U.S. benchmark interest rate by a quarter-point to 1.25% and reiterated that further increases can come at a "measured" pace, as long as inflation remains "relatively low." The first increase since May 2000 came on a unanimous vote, a sign that no Fed member saw enough of an inflation threat to seek a more aggressive move. "Although incoming inflation data are somewhat elevated, a portion of the increase in recent months appears to have been due to transitory factors," the Fed said in their policy statement. "The economy is getting better and it needs to get better at a nice, gradual rate," said Charles Holliday, CEO of DuPont. "It doesn't need to soar up because then it soars down too fast."
The ISM Manufacturing Index came in at 61.1 in June versus expectations of 61.0 and a reading of 62.8 in May. ISM Prices paid fell to 81.0 in June versus estimates of 82.0 and a reading of 86.0 in May. The manufacturing index's reading of 61.1 was the eighth straight month it exceeded 60, the longest such stretch since July 1983-February 1984, Bloomberg reported. Business inventories held at a record low relative to sales at the start of the quarter, suggesting production gains in coming months will help lift the economy. "Ongoing strong demand, depleted inventory levels, and the more attractive value of the dollar relative to recent years all bode will for manufacturing over the near-term," said Michael Englund, chief economist at Action Economics.
The Unemployment rate for June held at 5.6%, meeting estimates. The Change in Non-farm Payrolls for June was 112,000 versus estimates of 250,000 and a downwardly revised 235,000 in May. The Change in Manufacturing Payrolls for June was -11,000 versus an estimate of 30,000 and a downwardly revised 24,000 in May. The U.S. economy has now created 1.3 million jobs this year, the best 6-month performance since the stock market bubble burst and the economy began to plunge into recession in 2000, Bloomberg reported. Recent evidence that the economy is slowing modestly from its torrid growth rate over the last year may support Federal Reserve policy makers' view that they need to raise interest rates at only a "measured" pace to contain inflation, Bloomberg said.
Bottom Line: Personal Income and Spending remained robust in May. As well, Greenspan's favorite inflation indicator, the core PCE Index, remained near historically low levels. The substantial increase in consumer confidence is a result of increasing wages, improving job prospects, falling gasoline prices and improvements in the big picture in Iraq. This is a very positive development as the good news on the economy is finally penetrating the media's negative filter and affecting consumer attitudes. This summer is shaping up to be one of strongest domestic travel seasons ever. Moreover, the scorching pace of home-sales bodes well for the purchase of new household appliances. Manufacturing appears to be slowing from its 20-year highs in growth to more sustainable levels. However, a pause should be expected as factories re-tool this summer for anticipated strong demand. Recent declines in commodity prices and interest rates should allow the Fed to raise rates at a measured pace. Current market expectations of 100 basis points of tightening through December are likely too high. While the volatile employment numbers were a bit disappointing, the trend is still very strong job creation for the U.S. economy. I would begin to worry if we see a few more weak months. Overall, the data last week appear to show that the U.S. economy is either pausing before finishing the year with another strong spurt of growth or is transitioning to more sustainable growth levels.
Personal Income for May rose .6% versus expectations of a .5% rise and a .6% rise in April. Personal Spending for May rose 1.0%, the largest increase since October of 2001, versus estimates of a .8% rise and a .2% rise in April. The PCE Core Index, Greenspan's favorite measure of inflation, rose 1.6% year-over-year. Rising incomes reflect an economy that has created 1.3 million jobs this year, Bloomberg said. "We're very optimistic," said Tom Golisano, CEO of Paychex, a provider of payroll and employee-benefit services.
The Conference Board's Consumer Confidence Index for June rose to 101.9, the highest level in two years, versus expectations of 95.0 and a reading of 93.1 in May. Job gains, wage increases, improvements in Iraq and falling gas prices spurred confidence, Bloomberg said. The percentage of consumers that said they saw jobs as hard to find was the lowest since 2002. "Money in your pocket speaks the loudest," said Ellen Beeson, an economist at Bank of Tokyo-Mitsubishi. "Consumer perceptions of the labor market have finally caught up to reality and are outweighing concerns over Iraq and energy prices." Moreover, gasoline prices have fallen for five straight weeks, bolstering consumer attitudes, Bloomberg reported. "Leisure travel is very strong, and business travel is steadily getting better," said Thomas Parrington, CEO of Lodgian, an owner of 88 hotels. Finally, the survey showed the percentage of people planning to buy a major appliance in the next six months rose to 33.7, the highest in 6 years.
The Chicago Purchasing Manager Index fell to 56.4 in June versus expectations of 65.0 and a reading of 68.0 in May. The index had reached a 16-year high in May. "You can't accelerate forever once you hit your top speed," said Kevin Logan, a senior market economist at Dresdner Kleinwort Wasserstein. "We are still in growth mode, but the intensity of the pick-up is slowing down." A reading greater than 50 signals growth and the index has averaged 62.6 so far this year, one of the best averages on record, Bloomberg reported.
Federal Reserve policy makers raised the U.S. benchmark interest rate by a quarter-point to 1.25% and reiterated that further increases can come at a "measured" pace, as long as inflation remains "relatively low." The first increase since May 2000 came on a unanimous vote, a sign that no Fed member saw enough of an inflation threat to seek a more aggressive move. "Although incoming inflation data are somewhat elevated, a portion of the increase in recent months appears to have been due to transitory factors," the Fed said in their policy statement. "The economy is getting better and it needs to get better at a nice, gradual rate," said Charles Holliday, CEO of DuPont. "It doesn't need to soar up because then it soars down too fast."
The ISM Manufacturing Index came in at 61.1 in June versus expectations of 61.0 and a reading of 62.8 in May. ISM Prices paid fell to 81.0 in June versus estimates of 82.0 and a reading of 86.0 in May. The manufacturing index's reading of 61.1 was the eighth straight month it exceeded 60, the longest such stretch since July 1983-February 1984, Bloomberg reported. Business inventories held at a record low relative to sales at the start of the quarter, suggesting production gains in coming months will help lift the economy. "Ongoing strong demand, depleted inventory levels, and the more attractive value of the dollar relative to recent years all bode will for manufacturing over the near-term," said Michael Englund, chief economist at Action Economics.
The Unemployment rate for June held at 5.6%, meeting estimates. The Change in Non-farm Payrolls for June was 112,000 versus estimates of 250,000 and a downwardly revised 235,000 in May. The Change in Manufacturing Payrolls for June was -11,000 versus an estimate of 30,000 and a downwardly revised 24,000 in May. The U.S. economy has now created 1.3 million jobs this year, the best 6-month performance since the stock market bubble burst and the economy began to plunge into recession in 2000, Bloomberg reported. Recent evidence that the economy is slowing modestly from its torrid growth rate over the last year may support Federal Reserve policy makers' view that they need to raise interest rates at only a "measured" pace to contain inflation, Bloomberg said.
Bottom Line: Personal Income and Spending remained robust in May. As well, Greenspan's favorite inflation indicator, the core PCE Index, remained near historically low levels. The substantial increase in consumer confidence is a result of increasing wages, improving job prospects, falling gasoline prices and improvements in the big picture in Iraq. This is a very positive development as the good news on the economy is finally penetrating the media's negative filter and affecting consumer attitudes. This summer is shaping up to be one of strongest domestic travel seasons ever. Moreover, the scorching pace of home-sales bodes well for the purchase of new household appliances. Manufacturing appears to be slowing from its 20-year highs in growth to more sustainable levels. However, a pause should be expected as factories re-tool this summer for anticipated strong demand. Recent declines in commodity prices and interest rates should allow the Fed to raise rates at a measured pace. Current market expectations of 100 basis points of tightening through December are likely too high. While the volatile employment numbers were a bit disappointing, the trend is still very strong job creation for the U.S. economy. I would begin to worry if we see a few more weak months. Overall, the data last week appear to show that the U.S. economy is either pausing before finishing the year with another strong spurt of growth or is transitioning to more sustainable growth levels.
Friday, July 02, 2004
Weekly Scoreboard*
Indices
S&P 500 1,125.38 -.80%
Dow 10,282.83 -.86%
NASDAQ 2,006.66 -.93%
Russell 2000 582.72 -.85%
Volatility(VIX) 15.08 -.72%
AAII % Bulls 56.97 +.99%
US Dollar 87.99 -.89%
CRB 268.23 -1.48%
Futures Spot Prices
Gold 398.70 -1.04%
Crude Oil 38.39 +2.51%
Natural Gas 6.15 -3.64%
Base Metals 109.94 +.41%
10-year US Treasury Yield 4.46% -4.09%
Average 30-year Mortgage Rate 6.21% -.64%
Leading Sectors
Broadcasting +2.09%
Papers +1.43%
Oil Service +.83%
Lagging Sectors
Retail -3.55%
Semis -4.51%
Disk Drives -5.84%
*% Gain or loss for the week
S&P 500 1,125.38 -.80%
Dow 10,282.83 -.86%
NASDAQ 2,006.66 -.93%
Russell 2000 582.72 -.85%
Volatility(VIX) 15.08 -.72%
AAII % Bulls 56.97 +.99%
US Dollar 87.99 -.89%
CRB 268.23 -1.48%
Futures Spot Prices
Gold 398.70 -1.04%
Crude Oil 38.39 +2.51%
Natural Gas 6.15 -3.64%
Base Metals 109.94 +.41%
10-year US Treasury Yield 4.46% -4.09%
Average 30-year Mortgage Rate 6.21% -.64%
Leading Sectors
Broadcasting +2.09%
Papers +1.43%
Oil Service +.83%
Lagging Sectors
Retail -3.55%
Semis -4.51%
Disk Drives -5.84%
*% Gain or loss for the week
Mid-day Update
S&P 500 1,127.01 -.17%
NASDAQ 2,007.68 -.39%
Leading Sectors
Homebuilders +2.24%
Utilities +1.01%
Oil Service +.51%
Lagging Sectors
Software -1.12%
Disk Drives -1.25%
Semis -1.87%
Other
Crude Oil 38.40 -.75%
Natural Gas 6.15 -1.0%
Gold 398.70 +.58%
Base Metals 109.94 +.06%
U.S. Dollar 87.97 -.93%
10-Yr. T-note Yield 4.45% -2.32%
VIX 14.98 -1.38%
Put/Call .88 -5.38%
NYSE Arms 2.37 -15.66%
Market Movers
AAPL -4.6% after saying the next version of its iMac computer will be about two months late.
CMX -5.4% after saying the attorney general of Washington sate has demanded information about business practices in the company and its recently acquired AdvancePCS unit.
JUNO +10.8% after announcing its board has declared a one-time cash dividend of $60 million payable to the holders of its common and preferred stock.
DLI +12.44% after saying it would be acquired by Church & Dewight and Kelso & Co. for $385 million in cash.
*Homebuilders + across the board on interest rate decline.
ESPD -25.4% after lowering 2Q estimates and multiple downgrades.
MAMA -12.3% after Billionaire Mark Cuban sold his stake.
NFLX -9.8% as strong subscriber growth did not meet optimistic expectations.
SY -11.83% after cutting 2Q forecast.
PPP -10.77% after deeming its Hungarian development well "disappointing."
Economic Data
Unemployment Rate for June came in at 5.6% versus estimates of 5.6% and 5.6% in May.
Average Hourly Earnings for June rose .1% versus estimates of a .3% rise and a .3% rise in May.
Change in Non-farm Payrolls for June was 112k versus estimates of 250K and a downwardly revised 235K in May.
Change in Manufacturing Payrolls for June was -11K versus an estimate of 30K and a downwardly revised 24K in May.
Average Weekly Hours for June came in at 33.6 versus an estimate of 33.8 and 33.8 in May.
Factory Orders for May fell .3% versus estimates of a .7% decline and an upwardly revised 1.1% fall in April.
Recommendations
SLGN rated Overweight at JP Morgan. GGC cut to Reduce at UBS. Citi SmithBarney raised AAPL to Buy. Citi said to Buy BWA and sell SUP. Citi reiterated Sell on STX, target $10. Citi reiterated Sell on GDT, target $51. Citi said favorite metal stocks are AA, NEM and FCX. Goldman Sachs reiterated Outperform on GDT, IGT, ADP, CEN, PAYX, VZ, INTC, AMD and CAL. Goldman reiterated Underperform on BPL. Goldman said Semi Industry Assoc. data were very good overall, possible weakness at NSM and TXN.
Mid-day News
U.S. stocks are modestly lower mid-day as a report showed U.S. unemployment held steady at 5.6% and 112,000 jobs were created, below expectations. Interest rates plunged on the news, with the 10-yr T-note now yielding 4.45%, down almost 50 basis points from its recent high. The U.S. economy has now generated 1.3 million new jobs since the beginning of the year, the best 6 months of job creation since the stock market bubble burst in 2000, Bloomberg reported. The Fed's increase in interest rates, which theoretically should reduce home sales, may actually spur home buying and raise prices, the NY Times reported. The Los Angeles and Long Beach, California, twin ports had record international cargo for the third year in a row, fueled by increased trade, labor shortages and new security regulations, the LA Times reported. U.S. travel during the summer season is forecast to surpass the record pace of 2000, according to the Travel Industry Association of America. Republican incumbent Senator Lisa Murkowski and former Democratic Governor Tony Knowles of Alaska both support increased oil drilling in Alaska, as do most Alaskans, the AP reported. Pennsylvania's Senate approved a bill to legalize as many as 61,000 slot machines in the state in a bid to cut property tax bills by about 20% and borrow billions of dollars for public works, the AP said. Starbucks is the subject of efforts to form a union at a company location in New York City, the Philadelphia Inquirer reported. OAO Yukos, Russia's biggest oil exporter, said production may stop at some fields as early as next week after its bank accounts were frozen because of a $3.4 billion tax claim. Boston Scientific said it's voluntarily recalling 200 of its drug-coated Taxus devices after one person died and 16 were injured because of possible defects in the delivery system, Bloomberg reported. HealthSouth founder Scrushy enlisted company employees to work on his $3 million lake house and also used HealthSouth planes, helicopters and automobiles for personal purposes, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged today as my gaming, homebuilding and security longs are rising, offsetting losses in my internet and telecom equipment longs. I have not traded and the Portfolio is still 75% net long. After growing at its fastest rate in 20 years, fueling inflation fears, the U.S. economy appears to be downshifting to a more sustainable and less inflationary rate of growth. As interest rates plunge, the bears will likely shift their main argument away from inflation and back to a significantly weakening economy, which will prove to be another mistake. Historically, U.S. stocks perform their best when investor expectations are for moderate growth and inflation rather than runaway growth and high inflation. I expect stocks to rally on Tuesday, barring a major terrorist attack over the weekend.
NASDAQ 2,007.68 -.39%
Leading Sectors
Homebuilders +2.24%
Utilities +1.01%
Oil Service +.51%
Lagging Sectors
Software -1.12%
Disk Drives -1.25%
Semis -1.87%
Other
Crude Oil 38.40 -.75%
Natural Gas 6.15 -1.0%
Gold 398.70 +.58%
Base Metals 109.94 +.06%
U.S. Dollar 87.97 -.93%
10-Yr. T-note Yield 4.45% -2.32%
VIX 14.98 -1.38%
Put/Call .88 -5.38%
NYSE Arms 2.37 -15.66%
Market Movers
AAPL -4.6% after saying the next version of its iMac computer will be about two months late.
CMX -5.4% after saying the attorney general of Washington sate has demanded information about business practices in the company and its recently acquired AdvancePCS unit.
JUNO +10.8% after announcing its board has declared a one-time cash dividend of $60 million payable to the holders of its common and preferred stock.
DLI +12.44% after saying it would be acquired by Church & Dewight and Kelso & Co. for $385 million in cash.
*Homebuilders + across the board on interest rate decline.
ESPD -25.4% after lowering 2Q estimates and multiple downgrades.
MAMA -12.3% after Billionaire Mark Cuban sold his stake.
NFLX -9.8% as strong subscriber growth did not meet optimistic expectations.
SY -11.83% after cutting 2Q forecast.
PPP -10.77% after deeming its Hungarian development well "disappointing."
Economic Data
Unemployment Rate for June came in at 5.6% versus estimates of 5.6% and 5.6% in May.
Average Hourly Earnings for June rose .1% versus estimates of a .3% rise and a .3% rise in May.
Change in Non-farm Payrolls for June was 112k versus estimates of 250K and a downwardly revised 235K in May.
Change in Manufacturing Payrolls for June was -11K versus an estimate of 30K and a downwardly revised 24K in May.
Average Weekly Hours for June came in at 33.6 versus an estimate of 33.8 and 33.8 in May.
Factory Orders for May fell .3% versus estimates of a .7% decline and an upwardly revised 1.1% fall in April.
Recommendations
SLGN rated Overweight at JP Morgan. GGC cut to Reduce at UBS. Citi SmithBarney raised AAPL to Buy. Citi said to Buy BWA and sell SUP. Citi reiterated Sell on STX, target $10. Citi reiterated Sell on GDT, target $51. Citi said favorite metal stocks are AA, NEM and FCX. Goldman Sachs reiterated Outperform on GDT, IGT, ADP, CEN, PAYX, VZ, INTC, AMD and CAL. Goldman reiterated Underperform on BPL. Goldman said Semi Industry Assoc. data were very good overall, possible weakness at NSM and TXN.
Mid-day News
U.S. stocks are modestly lower mid-day as a report showed U.S. unemployment held steady at 5.6% and 112,000 jobs were created, below expectations. Interest rates plunged on the news, with the 10-yr T-note now yielding 4.45%, down almost 50 basis points from its recent high. The U.S. economy has now generated 1.3 million new jobs since the beginning of the year, the best 6 months of job creation since the stock market bubble burst in 2000, Bloomberg reported. The Fed's increase in interest rates, which theoretically should reduce home sales, may actually spur home buying and raise prices, the NY Times reported. The Los Angeles and Long Beach, California, twin ports had record international cargo for the third year in a row, fueled by increased trade, labor shortages and new security regulations, the LA Times reported. U.S. travel during the summer season is forecast to surpass the record pace of 2000, according to the Travel Industry Association of America. Republican incumbent Senator Lisa Murkowski and former Democratic Governor Tony Knowles of Alaska both support increased oil drilling in Alaska, as do most Alaskans, the AP reported. Pennsylvania's Senate approved a bill to legalize as many as 61,000 slot machines in the state in a bid to cut property tax bills by about 20% and borrow billions of dollars for public works, the AP said. Starbucks is the subject of efforts to form a union at a company location in New York City, the Philadelphia Inquirer reported. OAO Yukos, Russia's biggest oil exporter, said production may stop at some fields as early as next week after its bank accounts were frozen because of a $3.4 billion tax claim. Boston Scientific said it's voluntarily recalling 200 of its drug-coated Taxus devices after one person died and 16 were injured because of possible defects in the delivery system, Bloomberg reported. HealthSouth founder Scrushy enlisted company employees to work on his $3 million lake house and also used HealthSouth planes, helicopters and automobiles for personal purposes, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged today as my gaming, homebuilding and security longs are rising, offsetting losses in my internet and telecom equipment longs. I have not traded and the Portfolio is still 75% net long. After growing at its fastest rate in 20 years, fueling inflation fears, the U.S. economy appears to be downshifting to a more sustainable and less inflationary rate of growth. As interest rates plunge, the bears will likely shift their main argument away from inflation and back to a significantly weakening economy, which will prove to be another mistake. Historically, U.S. stocks perform their best when investor expectations are for moderate growth and inflation rather than runaway growth and high inflation. I expect stocks to rally on Tuesday, barring a major terrorist attack over the weekend.
Friday Watch
Earnings of Note
Company/Estimate
None of note.
Splits
WIT 3-for-1
Economic Data
Unemployment Rate for June estimated at 5.6% versus 5.6% in May.
Average Hourly Earnings for June estimated up .3% versus an increase of .3% in May.
Change in Non-farm Payrolls for June estimated at 250K versus 248K in May.
Change in Manufacturing Payrolls for June estimated at 30K versus 32K in May.
Average Weekly Hours for June estimated at 33.8 versus 33.8 in May.
Recommendations
Goldman Sachs reiterated Outperform on KO, MRVL, AGR/A and Underperform on FSS, QGENF. IRF will benefit from expanding its line of semiconductors used in specialized applications, Business Week reported. MRH may rise as the company buys back stock, Business Week reported. BTI will boost its earnings per share 15% by selling its U.S. unit to R.J. Reynolds Tobacco, Business Week reported.
Late-Night News
Asian indices are lower on weakness in U.S. technology shares. Jordan would send troops to Iraq if its interim government asked for military help, making it the first Arab state to agree to do so, Reuters reported. Merrill Lynch got approval to set up a fund-management venture with the investment-banking unit of Bank of China, the Shanghai Securities News reported. Marvell Technology took business away from China's Semiconductor Manufacturing International because it wasn't satisfied with quality and gave it to Taiwan Semi and Chartered Semi, the Commercial Times said. New Mexico Governor Bill Richardson told Senator Kerry he doesn't wan to be considered as a possible running mate, the AP reported. An astronomer using the Hubble Space Telescope found as many as 100 planets circling other stars, the BBC reported. Toyota Motor plans to add production of Prius hybrid-electric cars at a second plant in Japan to meet higher-than-planned demand, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.75 to -.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on a better-than-expected jobs report and a decline in the price of oil. My short-term trading indicators are giving mixed signals and the Portfolio is 75% net long heading into tomorrow.
Company/Estimate
None of note.
Splits
WIT 3-for-1
Economic Data
Unemployment Rate for June estimated at 5.6% versus 5.6% in May.
Average Hourly Earnings for June estimated up .3% versus an increase of .3% in May.
Change in Non-farm Payrolls for June estimated at 250K versus 248K in May.
Change in Manufacturing Payrolls for June estimated at 30K versus 32K in May.
Average Weekly Hours for June estimated at 33.8 versus 33.8 in May.
Recommendations
Goldman Sachs reiterated Outperform on KO, MRVL, AGR/A and Underperform on FSS, QGENF. IRF will benefit from expanding its line of semiconductors used in specialized applications, Business Week reported. MRH may rise as the company buys back stock, Business Week reported. BTI will boost its earnings per share 15% by selling its U.S. unit to R.J. Reynolds Tobacco, Business Week reported.
Late-Night News
Asian indices are lower on weakness in U.S. technology shares. Jordan would send troops to Iraq if its interim government asked for military help, making it the first Arab state to agree to do so, Reuters reported. Merrill Lynch got approval to set up a fund-management venture with the investment-banking unit of Bank of China, the Shanghai Securities News reported. Marvell Technology took business away from China's Semiconductor Manufacturing International because it wasn't satisfied with quality and gave it to Taiwan Semi and Chartered Semi, the Commercial Times said. New Mexico Governor Bill Richardson told Senator Kerry he doesn't wan to be considered as a possible running mate, the AP reported. An astronomer using the Hubble Space Telescope found as many as 100 planets circling other stars, the BBC reported. Toyota Motor plans to add production of Prius hybrid-electric cars at a second plant in Japan to meet higher-than-planned demand, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.75 to -.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on a better-than-expected jobs report and a decline in the price of oil. My short-term trading indicators are giving mixed signals and the Portfolio is 75% net long heading into tomorrow.
Thursday, July 01, 2004
Thursday Close
S&P 500 1,128.94 -1.04%
NASDAQ 2,015.55 -1.57%
Leading Sectors
Nanotechnology +.98%
Defense +.94%
Restaurants +.72%
Lagging Sectors
Semis -3.72%
Networking -4.01%
Disk Drives -4.03%
Other
Crude Oil 38.59 -.44%
Natural Gas 6.21 -.08%
Gold 396.40 unch.
Base Metals 109.87 +.50%
U.S. Dollar 88.85 +.06%
10-Yr. T-note Yield 4.56% -.39%
VIX 15.20 +6.0%
Put/Call .93 +19.23%
NYSE Arms 2.81 +162.62%
After-hours Movers
JUNO +9.80% after announcing its board has declared a one-time cash dividend of $60 million payable to the holders of its common and preferred stock.
ESPD -12.83% after lowering 2Q estimates.
NFLX -3.06% after saying 2Q subscriber forecast at high end of range.
NBR -3.52% after cutting 2Q and 04 forecast.
Recommendations
Goldman Sachs raised CZN to Outperform. Goldman reiterated Outperform on ISG, NUE, MON, IACI and IGT.
After-hours News
U.S. stocks finished lower today on a rise in energy prices and weakness in technology, over earnings concerns. After the close, Australia and Malaysia said they may soon start talks on a free-trade agreement that would accelerate plans for a regional agreement with 10 south-east Asian countries, the Australian Financial Review reported. Verizon Wireless agreed to buy Qwest Communications International's wireless assets for $418 million, adding capacity in cities including Denver, Phoenix and Seattle. Nielsen Media Research may proceed with its plans to introduce a new local tv ratings system in Los Angeles next week after a California judge denied Univision TV Group's bid for a delay, Bloomberg reported. Lockheed Martin received a definite order for 22 F/A-22 fighter jets from the U.S. Air Force, setting the value of the contract first announced in March at $2.03 billion, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my technology longs. I took a few more profits in the afternoon, leaving the Portfolio 75% net long. It appears to me that investors are overreacting to recent economic data and the rise in energy prices. This may be a result of the coming holiday weekend and repositioning into the new quarter. I would like to see a reversal of the recent selling by not later than next Tuesday.
NASDAQ 2,015.55 -1.57%
Leading Sectors
Nanotechnology +.98%
Defense +.94%
Restaurants +.72%
Lagging Sectors
Semis -3.72%
Networking -4.01%
Disk Drives -4.03%
Other
Crude Oil 38.59 -.44%
Natural Gas 6.21 -.08%
Gold 396.40 unch.
Base Metals 109.87 +.50%
U.S. Dollar 88.85 +.06%
10-Yr. T-note Yield 4.56% -.39%
VIX 15.20 +6.0%
Put/Call .93 +19.23%
NYSE Arms 2.81 +162.62%
After-hours Movers
JUNO +9.80% after announcing its board has declared a one-time cash dividend of $60 million payable to the holders of its common and preferred stock.
ESPD -12.83% after lowering 2Q estimates.
NFLX -3.06% after saying 2Q subscriber forecast at high end of range.
NBR -3.52% after cutting 2Q and 04 forecast.
Recommendations
Goldman Sachs raised CZN to Outperform. Goldman reiterated Outperform on ISG, NUE, MON, IACI and IGT.
After-hours News
U.S. stocks finished lower today on a rise in energy prices and weakness in technology, over earnings concerns. After the close, Australia and Malaysia said they may soon start talks on a free-trade agreement that would accelerate plans for a regional agreement with 10 south-east Asian countries, the Australian Financial Review reported. Verizon Wireless agreed to buy Qwest Communications International's wireless assets for $418 million, adding capacity in cities including Denver, Phoenix and Seattle. Nielsen Media Research may proceed with its plans to introduce a new local tv ratings system in Los Angeles next week after a California judge denied Univision TV Group's bid for a delay, Bloomberg reported. Lockheed Martin received a definite order for 22 F/A-22 fighter jets from the U.S. Air Force, setting the value of the contract first announced in March at $2.03 billion, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my technology longs. I took a few more profits in the afternoon, leaving the Portfolio 75% net long. It appears to me that investors are overreacting to recent economic data and the rise in energy prices. This may be a result of the coming holiday weekend and repositioning into the new quarter. I would like to see a reversal of the recent selling by not later than next Tuesday.
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