Market Close [just for you]
Close Dow -80.33 at 9987.53, S&P -11.13 at 1145.42, Nasdaq -24.78 at 2022.46: On a trading day marked by light total volume, the major averages finished the session in negative ground. Afternoon comments from Federal Reserve Chairman Alan Greenspan served to place pressure on stocks -- the sell pressure materialized despite the fact that his remarks were not much of a surprise. Though Mr. Greenspan indicated it is too early to say an economic recovery is in sight, he did acknowledge that the "unremittingly negative outlook has now turned mixed." Those comments cut in two different directions from an investment perspective. For those investors waiting on an economic recovery, the remarks were a undoubtedly a disappointment. Yet the silver lining for some was that the Chairman clearly left the door open to further easing on interest rates. Fed funds futures did indeed spike and are now pricing in a better than 60% chance of another 25 basis point rate cut...
Outside of Greenspan, investors were mulling over the Producer Price Index (PPI) data which had been released prior to the market open. The PPI fell 0.7% in December while the core rate, which excludes food and energy, dropped 0.1%. Both figures were lower than the consensus estimates of -0.2% and +0.1% respectively. While the inflation data were good news for the market, investors are generally not focused on inflation in the current climate. The primary concern pertains to the timing of an economic recovery which is another reason Greenspan's comments impacted afternoon trade activity...
On the corporate front, both semiconductors and computer hardware held in relatively well on the session. Pre-market research notes on two important names contributed to the relative strength. Merrill Lynch came out positive on Dell Computer (DELL +1.0%), saying channel checks indicate the company is tracking to beat fourth quarter estimates on stronger than expected consumer PC sales during holiday season. The firm believes revenues could come in as high as $7.8 billion vs. the estimate of $7.65 billion and that EPS may come in a penny higher than the consensus of $0.16 per share. As a consequence, the firm reiterated its Strong Buy rating and $35 price target...
Separately, Lehman Brothers' Dan Niles raised estimates for Intel (INTC +0.8%) saying he believes the company will guide capex higher to $7 billion from $6 billion, but has concerns about valuation. Niles believes constraints on production of Pentium 4's will drive average selling prices higher but nonetheless recommends taking profits into the company's January 15th earnings release. DJTA -2.1%, DJUA -0.9%, Nasdaq 100 -1.4%, Russell 2000 -1.1%, SOX -1.0%, S&P Midcap 400 -1.0%, XOI -1.0%, NYSE Adv/Dec 1306/1834, Nasdaq Adv/Dec 1513/2100
3:30PM : Next week, the corporate earnings calendar is much heavier as earnings season swings into full gear. On Tuesday, look for reports from technology bellwether Intel (INTC) as well as optical networker Juniper Networks (JNPR). That's followed by Yahoo! (YHOO) on Wednesday after the close and Dow component Citigroup (C) before the open on Thursday. On the economic front, the Consumer Price Index or CPI is set for release on Tuesday. For a complete list of what to expect next week, please visit Briefing.com's Earnings Calendar and Economic Calendar. DJTA -1.9%, DJUA -0.6%, Nasdaq 100 -0.8%, Russell 2000 -0.5%, SOX -0.5%, S&P Midcap 400 -0.6%, XOI -0.6%, NYSE Adv/Dec 1406/1700, Nasdaq Adv/Dec 1567/1975
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