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CLOSING WRAP-UP, Apr. 7
By Jody Osborne, Optionetics.com
4/7/2004 6:00:00 PM

http://www.optionetics.com/articles/article_full.asp?idNo=10199

Run at the flat line fails, with low volume creating volatility. The Dow ($INDU) finished with a loss of 90.66 points to close the session at 10,480.15. The S&P 500 ($SPX) fell 7.63 points, or 0.66 percent, to 1,140.53. The Nasdaq ($COMPQ) made up about half of its early losses, declining 0.47 percent, or 9.66 points, to 2,050.24. Volume came in at 1.45 billion on the NYSE and at 1.75 billion shares on the Naz. Market breadth was virtually flat on both the Big Board and Naz.

Alcoa (AA) got the selling going this morning after the aluminum company announced disappointing earnings last night. AA fell short of earnings estimates by two cents a share, though many analysts believe the second quarter results will make up for the shortfall in the first quarter. Nonetheless, AA shares fell 5.07 percent on the session, closing near their low of the day at $34.65.

In other earnings news, shares of disk maker Seagate (STX) fell sharply after warning that first quarter results would be below expectations. Estimates were for EPS of 21 cents, but this has been lowered now to 6 to 8 cents a share. As a result, STX shares fell 3.91 percent to close at $14.98. This was a nice bounce after hitting a low of $13.00 intraday. Shares of Nokia (NOK) continued to fall Wednesday after announcing an earnings warning Tuesday. Several analysts downgraded the stock, pushing it lower by 1.69 percent.

Concerns about the problems in Iraq continue to be in the back of traders’ minds, yet the focus is firmly on earnings news. There were some economic reports today, but nothing that impacted trading. Consumer sentiment remained flat, with mortgage applications falling on a rise in interest rates. Import and export prices both rose 0.9 percent, but the main culprit for higher import prices was a pick up in petroleum prices.

Overall, traders are looking for strong earnings this quarter and they got a taste of this after the bell when Yahoo (YHOO) beat estimates. YHOO shares are up sharply in after hours trading and this could help push tech stocks higher at the open Thursday. Another influence on stocks could come from General Electric’s (GE) earnings report before the bell Thursday. Earnings season often creates volatility and this quarter isn’t likely to be any different, so be prepared and understand that your trades might see day to day fluctuations.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site