|
Wall St. pauses
|
 |
December 14, 2001: 5:31 p.m. ET
Weak corporate, economic data restrains investors, trading sluggish.
By Staff Writer Parija Bhatnagar
|
NEW YORK (CNN/Money) - U.S. stocks managed a positive finish Friday as investors found some last-minute enthusiasm after a lackluster session influenced by gloomy corporate and economic data.
The tail-end optimism, inspired by hopes of a possible end to the war in Afghanistan over the weekend, was not enough to prevent the major indexes from turning in their worst weekly performances since September.
Market watchers said a string of profit warnings, layoff announcements and discouraging economic news -- including November's dismal retail sales -- intensified concerns about the economy's recovery.
"The market is recognizing that the economy has bottomed, it didn't cave. But it's hard to make progress from here. The Fed is mostly through with easing. We now need solid evidence of real economic recovery, principally from the consumers," Henry Cavanna, portfolio manager with JP Morgan Investment Management, told CNNfn's Street Sweep.
The Dow Jones industrial average gained 44.70 points, or 0.46 percent, to 9,811.15, while the Nasdaq composite index added 6.66 points, or 0.35 percent, to end at 1,953.17. The Standard & Poor's 500 index rose 3.69 points, or 0.36 percent, to 1,123.07.
It was a pullback week for the major indexes as the markets coped with a slew of profit warnings and corporate job cuts. The tech-heavy Nasdaq composite posted the first weekly decline after a strong run-up in November, hurt by ominous news from Lucent and Ciena.
And an unprecedented 11th interest cut by the Federal Reserve did nothing to lift the markets Tuesday after Merck delivered a hefty blow with an earnings warning. More job cuts came Thursday from the three A's -- Applied Materials (AMAT: up $1.24 to $42.32, Research, Estimates), American Express (AXP: down $0.34 to $32.26, Research, Estimates) and Aetna (AET: up $0.43 to $31.17, Research, Estimates).
For the week, the Dow fell 2.4 percent, while the Nasdaq composite index dropped 3.4 percent. In the broader market S&P 500 gave back 3 percent.
Market breadth was mixed on heavy volume. On the New York Stock Exchange, advancers edged decliners 9-to-7 as 1.2 billion shares traded. Nasdaq advancers edged decliners as 1.8 billion shares changed hands.
Asian markets finished mixed Friday, with Tokyo's Nikkei index managing a modest gain. European markets ended lower.
Treasury prices fell, with the 10-year note yield at 5.18 percent. The dollar jumped against the yen, which fell to a three-year low on speculation the Bank of Japan could further weaken the currency in a bid to boost exports. But the dollar edged lower against the euro. Light crude oil futures gained $1.00 to $19.49 a barrel in New York.
Economic data digested
U.S. industrial output shrank again in November for the thirteenth time in 14 months, signaling continued contraction in the manufacturing sector, the hardest hit in the ailing economy.
Inflation generally remains in check, with consumer prices unchanged in November. The Labor Department said the Consumer Price Index, the government's main inflation gauge, was flat, versus forecasts for a 0.2 percent drop, according to Briefing.com.
But with inflation under control, the Federal Reserve remains in a position to continue its easing policy.
News abounded among drug and biotech issues. Amgen (AMGN: down $4.16 to $56.03, Research, Estimates), the nation's largest biotechnology company, is reported to be in advanced talks to buy rival Immunex (IMNX: down $1.34 to $25.62, Research, Estimates) -- maker of the popular Enbrel treatment for rheumatoid arthritis -- in a $17 billion cash-and-stock deal.
Drugmaker Bristol-Myers Squibb (BMY: up $1.00 to $50.00, Research, Estimates) said its earnings next year will miss forecasts. The announcement came the same week that Merck (MRK: up $0.15 to $58.09, Research, Estimates) warned its 2002 earnings per share would be much lower than current Wall Street expectations.
But Goldman Sachs upgraded Bristol-Myers to "trading buy" from "market outperform," saying it was pleased with the company's emphasis on research and development. Prudential Securities upgraded the stock to "buy" from "hold."
Drug developer Pharmacyclics (PCYC: down $12.31 to $9.39, Research, Estimates) said late Thursday its lead cancer drug, Xcytrin, failed to prove effective in the treatment of brain metastases, cancer that has spread to the brain from another part of the body.
The No. 2 software maker Oracle (ORCL: down $0.10 to $14.57, Research, Estimates) reported a fiscal second-quarter profit Thursday that met recently lowered expectations. The company also forecast that current-quarter profit may miss forecasts, but said earnings for its fiscal year ending in May will be in line with estimates.
Workers at BellSouth (BLS: up $0.14 to $38.74, Research, Estimates) and defense systems manufacturer ITT became the latest casualties of companies announcing pre-holiday layoffs. BellSouth said it would shave 1,200 technical field workers from its staff, while ITT announced plans to close five plants and cut 3,425 jobs due to a drop-off in demand for its connectors and switches.
Dow component McDonald's (MCD: up $1.16 to $26.80, Research, Estimates) expects fourth-quarter earnings that are a penny below Wall Street forecasts, citing weakness in the Asian economies and concern about food safety in Japan likely to adversely affect its bottom line. But the world's largest restaurant chain said it sees improving sales in Europe and the United States.
Shares of the independent power producer Calpine (CPN: down $2.85 to $13.20, Research, Estimates) felt pressure from the fallout of Enron (ENE: down $0.03 to $0.63, Research, Estimates)'s bankruptcy filing. Moody's Investors Services warned it may downgrade Calpine's debt to "junk" status on concern over the company's liquidity and financial flexibility.
Lehman Brothers cut its rating on the stock to "market perform" from "strong buy," citing increasing liquidity concerns and an uncertain earnings outlook and fears of a credit downgrade.
Other names in the sector with exposure to Enron pulled back. Mirant (MIR: down $2.65 to $15.70, Research, Estimates), Dynegy (DYN: down $1.64 to $24.94, Research, Estimates), NRG Energy (NRG: down $0.27 to $13.86, Research, Estimates), Williams (WMB: up $0.25 to $24.31, Research, Estimates) were lower.
Several names in the steel sector received analysts' upgrades. Salomon Smith Barney raised its ratings on four steelmakers, citing the trend toward consolidation in the industry. The firm upgraded AK Steel (AKS: down $0.57 to $10.70, Research, Estimates), Steel Dynamics (STLD: up $0.27 to $10.93, Research, Estimates) and USX-U.S. Steel (X: down $0.66 to $16.45, Research, Estimates) to "buy" from "neutral;" Nucor (NUE: up $0.45 to $49.53, Research, Estimates) was upgraded to "outperform" from "neutral."
Afghanistan, Middle East closely watched
Significant geopolitical developments continue to provide a backdrop to the action on Wall Street.
"It's been a rather difficult week and people want to head home for the weekend and find out what is the disposition of Mr. Bin Laden, if at all, and maybe see how things are clicking in the Middle East," Arthur Cashin, director of floor trading with UBS PaineWebber, told CNNfn's Halftime Report.
The latest reports from Afghanistan indicate that U.S. special forces, anti-Taliban tribal fighters and Pakistani troops may be closing in on suspected terrorist Osama bin Laden, believed to be holed up in a cave complex near Tora Bora.
|
|
|
Arthur Cashin, director of floor trading, UBS PaineWebber. | |
The news comes a day after the U.S. government aired a captured videotape that showed bin Laden apparently celebrating the Sept. 11 terrorist attacks. Some market watchers think bin Laden's capture could give a slight pop to U.S. markets if and when it occurs.
Meanwhile, the cycle of more bomb attacks and retaliatory strikes continued in the Middle East. Six Palestinians were reported killed after Israeli forces exchanged gunfire in three West Bank towns and continued the third night of air strikes in Gaza.
Next week's economic snapshot
Investors on Tuesday get a reading on housing starts released from the federal government. Economists surveyed by Briefing.com forecast a drop to an annual rate of 1.53 million in November from 1.55 million, but say that housing starts will still surpass last year's pace.
Also on the docket is the index of leading indicators, expected to have risen 0.2 percent in November on top of a 0.3 percent gain in October. The report is due out Wednesday by a private research group.
Personal spending numbers for November will be released Friday. Analysts expect the indicator to have dipped 0.5 percent, citing a drop in auto sales from October's record levels. 
|
|
|
|
|
|
|
