From Briefing.com: There wasn't any slugfest in the tech sector on Friday. Instead, there was just a sluggish outing, as there was little in the way of substantive developments.
The session, though, wouldn't have been complete without the requisite headline on the Oracle (ORCL 12.92 -0.41)-PeopleSoft (PSFT 17.42 -0.19) drama. The latest update had PeopleSoft's Board recommending to investors to reject Oracle's revised offer to acquire the company for $19.50 per share in cash. Once again, the PeopleSoft Board based its recommendation on the belief that the transaction faces regulatory delays, a significant likelihood of not being approved, and Oracle's intention to discontinue PeopleSoft's products. Once again, Oracle fired back saying PeopleSoft's Board has put management's interests first and added that it won't dismantle PeopleSoft's products. Stay tuned, because this fight isn't over yet.
As for the broader action in the Nasdaq Composite, the most actives list was led by the usual suspects, namely Cisco (CSCO 17.93 -0.63), Microsoft (MSFT 26.33 +0.26), Intel (INTC 20.67 -0.45) and Oracle (ORCL 12.92 -0.41). Total volume was on the lighter side of things at 1.76 bln shares. Consistent with the Nasdaq's modest loss, declining issues finished slightly ahead of advancing issues. Down volume, meanwhile, outpaced up volume by a 5-to-3 margin.
Altogether, the action in the tech sector on Friday was in keeping with Briefing.com's view that the bullish momentum is waning. That's not to say that a material decline is the next step, but rather, that the path of least resistance, as things stand now, is to the downside.-- Patrick J. O'Hare, Briefing.com
Close Dow +21.22 at 9200.75, S&P +1.03 at 995.73, Nasdaq -3.61 at 1645.03: In a virtual dearth of corporate and economic news, today's session was a relatively quiet one... The major averages started the day in positive territory, but ultimately proved unable to hold on to their early gains... The Nasdaq was first to fade off its highs due to selling pressure in the semiconductor, disk drive, software, and networking sectors and stayed on the defensive for the rest of the session...
Keeping in check the decline of the tech-heavy index was the biotech sector, which proved to be resilient due to gains in Amgen (AMGN 64.97 +1.15) following news of positive experiment results for its Enbrel combination therapy... The S&P 500 and the Dow fared better than the Nasdaq on a relative basis due to the strong financial and drug sectors and even managed to close the day in the green, albeit holding on to only a small fraction of their earlier gains... The Dow proved to be particularly strong and outperformed the S&P 500 and the Nasdaq throughout the day... Supporting the Dow were positive developments from its components such as General Motors (GM 38.50 +0.43) and General Electric (GE 30.00 +0.14)...
GM was upgraded at Prudential to Buy from Sell with a price target of $45 from $29, saying that the perception of an economic recovery should trump short-term negative news flow.... Separately, GM announced a $13 bln debt offering... GE reaffirmed its Q2 (Jun) EPS guidance of $0.37-0.39 in line with the Reuters Research consensus of $0.38... The indices closed the session near their session lows, but managed to post gains (however small) for the week, compared to last Friday's closing levels... Elsewhere, Treasuries spent the entirety of the session on the defensive and the 10-yr note closed the day down 10/32, bringing its yield to 3.37%...
Considering the fact that the 10-yr yield was as low as 3.08% on Monday, this week's increase in the yield was the biggest since the week of March 21...NYSE Adv/Dec 1573/1664, Nasdaq Adv/Dec 1572/1600
4:23PM Weekly Wrap: The equity market staged an impressive rally on Monday, but there was little follow through the remainder of the week. Nevertheless, the strength of Monday's session, in which the Dow, Nasdaq, and S&P posted gains of 202, 40, and 22 points, respectively, got the job done for the bulls as the major indices closed the week with modest gains.
Driving that strong rally on Monday was a regional manufacturing report in the form of the New York Empire State Index that checked in much stronger than expected at 26.8 (consensus 8.8) and lent credence to the view that economic activity is accelerating in the post-war environment. There was some chatter, too, that posturing ahead of Friday's quadruple witching expiration of options, index options, stock index futures, and single stock futures also played a part in the rally.
Beyond Monday, though, the market labored to make much headway as buyers reined in their enthusiasm. To that end, there were some interesting happenings that suggested the bullish momentum may be tiring.
In particular, there was a batch of better than expected earnings news out of the influential brokerage and homebuilding sectors that was greeted with selling interest. Meanwhile, talk of a rate cut by the Fed at next week's FOMC meeting was taken in stride by equity investors; the highflying biotech sector took a nosedive with the BTK index dropping 4.2% for the week; the market traded down on Thursday following a favorable Leading Indicators report and a Philadelphia Fed Index that was only in-line with expectations; and on Friday, the S&P mustered all of a 1-point gain despite General Electric (GE) reaffirming its quarterly and full-year guidance.
That type of action isn't consistent with a market that is running with a full tank of gas and Briefing.com is inclined to view it as sign that a period of consolidation is in the offing. Accordingly, we maintain that investors should adopt a more cautious stance over the near-term and not chase the rally at this juncture.
As an aside, the Treasury market fell victim to profit taking and suffered through the debate as to whether the Fed will cut rates by 25 basis points or 50 basis points. In fact, the 25 basis point rise in yield on the 10-yr note to 3.39%represented the largest one-week rise in yield since March.
With respect to next week's FOMC meeting, Briefing.com expects the Fed to lower rates by 25 basis points. For added thoughts on the interest rate decision, and to catch a glimpse of what else lies ahead for the market next week, be sure to read the Looking Ahead Story Stock.
2:05PM Read-Rite bankruptcy could impact Veeco's sales : Hoefer & Arnett believes that Read-Rite bankruptcy filing Tuesday could impact Veeco's (VECO) sales to its data storage customers over the next six months. Throughout the years, Read-Rite has purchased a number of Veeco process tools including ion etch, ion beam deposition and PVD/IBD cluster tools. RDRT is believed to have multiple (2 to 8) tools of each type. As a result of the bankruptcy, these tools will now be sold at auction.
12:08PM Fairchild Semi testing range top (FCS) 13.35 +0.25: -- Update -- -- Technical -- Stock tested resistance at 13.30 (200 day ema) in opening action and pulled back. Has bounced intraday and is now vacillating near the top of its seven session trading range in the 13.35/13.39 area.
11:14AM IBM flirting with 50 day average (IBM) 85.18 +0.63: -- Technical -- Big blue is attempting to stabilize above its 50 day sma (85.14) again with imporant range top resistance just slightly ahead at 85.24/85.29 (June highs).
10:14AM LSI Logic seen as likely SAS silicon partner for H-P (LSI) 7.82 +0.13: RBC Capital Mkts believes that the Industry Standard Server (ISS) group within Hewlett-Packard is close to selecting a silicon partner for its initial SAS strategy. Firm believes that HP is likely to select LSI over Adaptec for this program.
9:37AM Entegris may underperform near-term - Goldman Sachs (ENTG) 13.15 +0.17: Goldman Sachs maintains their In-Line rating following yesterday's strong results, but firm says the co's flat rev guidance for Q3 is disappointing; while ENTG has been their favorite small−cap stock, ENTG may underperform capex-driven peers in the near-term as relative valuation is stretched and capex growth is likely to outpace wafer start growth in 2H03.
8:22AM Morgan Stanley maintains Underweight on PMC-Sierra (PMCS) 12.74: Morgan Stanley maintains their Underweight rating on PMCS; although they believe the co is well-positioned and the telecom industry fundamentals appear to have at least stabilized, they are uncomfortable with the aggressive expectations that are driving the stock's premium valuation.
Cypress Semi (CY) 11.92 -0.52: In a 10-Q/A filing, co revises quarterly results to reflect an error in the extraction of data related to the number of stock options utilized to arrive at the deduction for stock-based employee compensation expense. The correct pro forma loss per share is $0.33 and $0.56 for the three month periods ended March 30, 2003 and March 29, 2002 (vs previously reported losses of $0.28 and $0.35).
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