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CLOSING WRAP-UP, Apr. 16
By Jody Osborne, Optionetics.com
4/16/2004 4:30:00 PM

http://www.optionetics.com/articles/article_full.asp?idNo=10245

Markets close the week mixed once again, with the tech sector finishing in the red. The Dow ($INDU) closed at 10,451.97 Friday, gaining 54.51 points. The S&P 500 ($SPX) added 0.51 percent today, ending the session at 1,134.57. The Nasdaq ($COMPQ) gave up 6.43 points Friday, but managed to come 13 points off its intraday low. Volume was moderate today, with the NYSE seeing a little stronger volume due to options expiration. The NYSE traded 1.61 billion shares, with the Naz turning over 1.71 billion. Market breadth was positive by a 21-to-8 and 16-to-15 margin on the Big Board and Naz respectively.

Today’s session was highlighted by economic news and a flurry of earnings reports from Thursday night. Shares of IBM (IBM) were down nearly two percent on the session following its report. Though the company matched expectations, weakness in its services division led to selling. Nokia (NOK) continued to slide Friday, its second big decline in the last 10 days. Both times the move has occurred after the handset company has announced disappointing news about earnings. Since early April, NOK shares are down nearly 30 percent.

The chip sector continues to be under pressure, with the Philly Semiconductor Index ($SOX) down 1.75 percent Friday and down more than six percent on the week. Intel’s (INTC) disappointing earnings report earlier this week began the selling, with a strong report from Advanced Micro (AMD) unable to keep chip stocks afloat. In fact, AMD has been down the last two sessions following its earnings announcement.

Ironically, stocks mostly saw gains on Friday despite disappointing economic news. This is because traders have been worried about a hike in interest rates, but today’s reports helped lessen these fears. Industrial production fell 0.2 percent against estimates for a gain. Most of the decline was a result of lower utility output, but traders welcomed a drop in capacity utilization. The Fed normally looks at this measure to see if inflationary pressures are building and they aren’t if measured by capacity utilization. Consumer sentiment also unexpectedly fell in early April, possibly a result of higher gasoline prices and tax season. Of course, worries about the situation in Iraq and terrorism are also present.

Options expiration occurred without much incident, with volume remaining rather light and volatility not that large. In fact, the Dow and SPX both finished near the flat line this past week, though the Naz lost 2.78 percent. Next week will be another one filled with earnings news, so we can expect individual stocks and sectors to see sharp moves on these reports.

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