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Today's WrapUp by Scott Middleton 02.18.2004 Mon Tue Wed Thu Fri Archive |
Pause for Stocks
The Nasdaq fell marginally in an uneventful session where it traded in a tight range of 16 points, and spent most of the session just below the flat line with only occasional half-hearted sprints into positive territory. Investors pondered new data on the housing market as construction of new U.S. houses fell by about 8 percent to a seasonally adjusted annual rate of 1.90 million in January, according to Commerce Department estimates. The performance is the lowest rate since August, following the 20-year high of 2.07 million established in December.
Corporate Earnings reports continued to roll in as Applied Materials reported net income of $82 million, or 5 cents a share, on revenue of $1.56 billion. During the same quarter last year, Applied Materials lost $66 million, or 4 cents a share, on revenue of $1.05 billion. Excluding $167 million for restructuring charges, Applied Materials earned 12 cents a share, 4 cents better than analysts expected. Also, analysts had expected sales of $1.32 billion. The chip-equipment maker had predicted at the start of its first quarter earnings of 6 to 8 cents a share, not counting one-time charges, on sales of $1.28 billion to $1.3 billion. Applied Materials had predicted charges between $75 million and $125 million related to previously announced cost cuts. The surplus charges came from a laboratory that Applied was planning on utilizing in the future, but the company decided to close it. New orders rose 32 percent sequentially to $1.68 billion compared with the company's target order growth of 20 percent. Applied Material's backlog grew to $2.63 billion compared with $2.35 billion in the previous quarter. For its second quarter, Applied Materials expects sequential order growth of 30 percent, sales of $1.87 billion, and earnings between 17 and 19 cents a share. Analysts had expected, prior to Wednesday, sales of $1.48 billion and earnings of 11 cents a share on average, according to Reuters Research.
In a blow to IBM, a federal judge has ruled that IBM Corp. owes back payments - possibly worth billions of dollars - to 140,000 older employees who were harmed when the technology giant converted to a new kind of pension plan in the 1990s. The plaintiffs in the case want IBM to make up for what they lost after the company adopted a "cash balance" pension plan, which pays workers a lump sum when they leave the company. A federal judge had ruled last July that the plan amounted to age discrimination because it unfairly penalized older employees. The case is being closely watched because IBM was one of several companies that adopted cash balance plans in the '90s.
Financial Markets
The Dow Jones Industrial Average was off roughly 43 points, or 0.4 percent, to finish at 10,672, while the Nasdaq Composite fell about 4 points, or 0.2 percent, to 2,076.47. The S&P 500 index slid 0.4 percent to 1,151.82 and the small-cap Russell 2000 lost 0.5 percent to 591.48. Overall, losers trounced winners 20 to 13 on the New York Stock Exchange, and 19 to 13 on the Nasdaq. Volume on the Big Board reached 1.36 billion, while 1.77 billion shares changed hands on the Nasdaq.
April gold fell $3.70 to close at $412.80 an ounce on the New York Mercantile Exchange after gaining $5.70 an ounce in the previous session. Crude futures close above $35 per barrel as traders kept watch on OPEC for any signs of following through on a promise to curb production. The U.S. dollar rebounded to post gains after hitting an all-time low against the euro. The move came as China's central bank denied reports that it would revalue the yuan, and European officials indicated that further euro gains were unwanted.
Treasuries
The benchmark 10-year Treasury note was off 2/32 at 99 19/32 to yield 4.05 percent, up from 4.04 percent at the Tuesday close. The yield flirted with 4 percent for much of the morning. It hasn't closed below 4 percent since January 15. The 30-year bond was flat at 106 28/32, yielding 4.91. The 2-year note dipped 1/32 at 100 12/32, yielding 1.68 percent. The 5-year note sank 2/32 at 100 6/32, yielding 3.02 percent.
European Markets
The euro rose to a record high on the dollar for the second time in 2004 as it topped $1.29 overnight. The market's confidence that European officials are more reluctant to intervene than their Japanese counterparts remains. The common currency pulled back to $1.28 in afternoon trade. The German DAX Xetra 30 index ended down 0.52 points at 4,095. The French CAC 40 index rose 0.1 percent at 3,709. London stocks were weaker as drug and banking shares declined.
Asian Markets
The Nikkei 225 Average ended down 24 points, or 0.2 percent to 10,676.81. The broader Topix index fell 1 point, or 0.2 percent to 1,052.98. The Nikkei initially touched a high of 10,798, but gradually erased gains by the close amid worries over the strong yen and the continued deflation, analysts said.
Scott Middleton
© 2004 Scott Middleton
February 18, 2004
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