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Well-Known Member
By Eric Gillin
Staff Reporter
10/29/2002 12:54 PM EST
Updated from 11:49 a.m. EDT
The three-week rally suffered another setback on Tuesday, as weaker-than-expected consumer-confidence data sent buyers fleeing.
The Dow Jones Industrial Average off 100 points, or 1.2%, at 26. The Nasdaq Composite Index was off 26 points, or 2%, at 1290, while the S&P 500 was off 15 points, or 1.7%, at 875.
Consumer confidence fell for the fifth straight month, coming in at 79.4, a level unseen since November 1993. That's much lower than the 90.2 expected by analysts and the 93.3 mark set in September -- and another sign that the economic recovery could be stalling.
While the negative economic news has been bad for stocks, it has been great for Treasuries. The 10-year note was recently up 1 7/32, dropping its yield to 3.93%, while the two-year note was up 8/32, yielding 1.77%.
With the disappointing confidence data on the books and speculation swirling that the Federal Reserve may cut the federal funds rate at its Nov. 6 meeting, all eyes are now on Thursday's release of third-quarter gross domestic product data.
In corporate news, Procter & Gamble (PG:NYSE - news - commentary - research - analysis) posted slightly better-than-expected profit on an 11% revenue jump. Meanwhile, finance company CIT (CIT:NYSE - news - commentary - research - analysis) posted lower-than-expected results due to investment losses. After dropping yesterday, P&G was one of the market's notable bright spots, gaining 2.6% to $87.98, while CIT was just virtually flat at $16.85.
In a research note Tuesday morning, Lehman Brothers lowered its outlook on the food and retailing group, cutting its rating to negative from neutral, based on high valuation levels. Lehman cut its rating on A&P (GAP:NYSE - news - commentary - research - analysis) and Fleming (FLM:NYSE - news - commentary - research - analysis), two companies Lehman says were poorly positioned to deal with a consumer pullback. A&P was off 3.7% to $6.23, while Fleming was down 3% to $6.41.
Elsewhere, Campbell Soup (CPB:NYSE - news - commentary - research - analysis) was cut to underperform from neutral at CSFB, which said the soup maker faces a "long winter" if business at its core soup business doesn't improve. The brokerage set a new price target of $20, which is below Monday's close of $21.63. In Tuesday's session, Campbell was off 2.5% to $21.10.
It appears that more trouble is ahead for beleaguered Imclone (IMCL:Nasdaq - news - commentary - research - analysis) shareholders. On Tuesday, TheStreet.com reporter Adam Feuerstein reported that Erbitux, the company's cancer fighter, may be in danger of failing its European trials after testing showed it wasn't effective in helping colon cancer patients. Imclone was off 10.6% to $7.16.
Oxford Health (OHP:NYSE - news - commentary - research - analysis) saw its earnings tumble because of a big charge related to the settlement of suits prompted by a high-profile 1997 profit warning. Excluding the item, earnings were about a penny better than estimates. Oxford added to Monday's selloff, slipping 5% to $38.26.
On Tuesday morning, a report said marketing execs from Warner-Lambert, now a part of Pfizer (PFE:NYSE - news - commentary - research - analysis), tried to promote the epilepsy drug Neurotonin for an unapproved use back in 1997 instead of ordering additional clinical trials. The whiff of a new scandal sent investors scurrying from Pfizer stock, which was down 2.1% to $30.90.
In research notes, King Pharmaceuticals (KG:NYSE - news - commentary - research - analysis) was downgraded to hold from strong buy by Wachovia. Watson Pharmaceuticals (WPI:NYSE - news - commentary - research - analysis) was upped to strong buy from outperform by SG Cowen, which gave it a new price target of $35. The stocks moved in opposite directions, with King off 7.3% to $16.60 and Watson up 2.6% to $27.28.
Overall, both healthcare and pharmaceutical stocks were taking a beating. The American Stock Exchange Pharmaceutical Index was off 1.8%, while the Morgan Stanley/American Stock Exchange HMO Index was off 2.3%.
A published report said the talks between Prudential Financial (PRU:NYSE - news - commentary - research - analysis) and Wachovia (WB:NYSE - news - commentary - research - analysis) about combining their brokerage operations have fallen through. The nascent discussions had reportedly involved a joint venture that would've rivaled Merrill Lynch (MER:NYSE - news - commentary - research - analysis) in its retail scope. Both companies were soft on the news, with Prudential down 2.6% to $28.73 and Wachovia down 0.8% to $34.40.
Another drama in the securities industries continues, however, with reports that Citigroup (C:NYSE - news - commentary - research - analysis) Chairman Sandy Weill met last week with investigators from the National Association of Securities Dealers in their probe of Wall Street business practices. The meeting followed Weill's angry denial of reports last week that he'd broken ranks with the financial services giant after being told he was personally under investigation in the probe. No word on what was discussed at Friday's meeting. Citigroup was down 1.1% to $35.92.
Citigroup wasn't the only Blue Chip financial facing selling pressure. J.P. Morgan was down 4.5% to $20.30.
A report said AOL Time Warner (AOL:NYSE - news - commentary - research - analysis) Chairman Steve Case has privately raised the possibility of spinning off the America Online unit he founded almost 20 years ago and merged with Time Warner in January 2001. The Wall Street Journal said Case might just be blowing off steam after becoming the lightning rod for criticism about the merger's poor performance. AOL was down 2.3% to $14.35.
Cisco (CSCO:Nasdaq - news - commentary - research - analysis) was off 4.8% to $10.38 after being dropped to market perform from buy at CE Unterberg Towbin because of valuation and concerns that estimates will be reduced when the company reports earnings next week.
Meanwhile, Micron Technology's (MU:NYSE - news - commentary - research - analysis) earnings estimates were raised by Bear Stearns due to higher DRAM prices, but its stock was off 6.8% to $15.70.
Investors didn't stop with Micron. They sold off other rivals in the semiconductor industry as well, dropping the Philly Chipmakers 4.7%. Intel (INTC:Nasdaq - news - commentary - research - analysis) was off 3.4% to $16.24, Applied Materials (AMAT:Nasdaq - news - commentary - research - analysis) was down 6.7% to $14.10, while Xilinx (XLNX:Nasdaq - news - commentary - research - analysis) was down 7% to $17.74.
Overseas markets were much lower in the wake of the stateside selloff, with London's FTSE 100 losing 3.8% to 3936 and Germany's Xetra DAX falling 4.9% to 3043. In Asia, Japan's Nikkei gave up 0.6% to end at 8709, while Hong Kong's Hang Seng fell 2.2% to close at 9635.
Despite a deluge of positive analyst calls, stocks fell on Monday, with the Dow Jones Industrial Average losing 75 points, or 0.9%, to 8368.04, and the Nasdaq shedding 15 points, or 1.2%, to 1315.81. The one-day drop followed three weeks of gains and led some to worry the bear market was reasserting itself ahead of the GDP report later in the week and next week's Fed meeting.
Source:
http://www.thestreet.com/_tsclsii/markets/marketstory/10050798.html
Staff Reporter
10/29/2002 12:54 PM EST
Updated from 11:49 a.m. EDT
The three-week rally suffered another setback on Tuesday, as weaker-than-expected consumer-confidence data sent buyers fleeing.
The Dow Jones Industrial Average off 100 points, or 1.2%, at 26. The Nasdaq Composite Index was off 26 points, or 2%, at 1290, while the S&P 500 was off 15 points, or 1.7%, at 875.
Consumer confidence fell for the fifth straight month, coming in at 79.4, a level unseen since November 1993. That's much lower than the 90.2 expected by analysts and the 93.3 mark set in September -- and another sign that the economic recovery could be stalling.
While the negative economic news has been bad for stocks, it has been great for Treasuries. The 10-year note was recently up 1 7/32, dropping its yield to 3.93%, while the two-year note was up 8/32, yielding 1.77%.
With the disappointing confidence data on the books and speculation swirling that the Federal Reserve may cut the federal funds rate at its Nov. 6 meeting, all eyes are now on Thursday's release of third-quarter gross domestic product data.
In corporate news, Procter & Gamble (PG:NYSE - news - commentary - research - analysis) posted slightly better-than-expected profit on an 11% revenue jump. Meanwhile, finance company CIT (CIT:NYSE - news - commentary - research - analysis) posted lower-than-expected results due to investment losses. After dropping yesterday, P&G was one of the market's notable bright spots, gaining 2.6% to $87.98, while CIT was just virtually flat at $16.85.
In a research note Tuesday morning, Lehman Brothers lowered its outlook on the food and retailing group, cutting its rating to negative from neutral, based on high valuation levels. Lehman cut its rating on A&P (GAP:NYSE - news - commentary - research - analysis) and Fleming (FLM:NYSE - news - commentary - research - analysis), two companies Lehman says were poorly positioned to deal with a consumer pullback. A&P was off 3.7% to $6.23, while Fleming was down 3% to $6.41.
Elsewhere, Campbell Soup (CPB:NYSE - news - commentary - research - analysis) was cut to underperform from neutral at CSFB, which said the soup maker faces a "long winter" if business at its core soup business doesn't improve. The brokerage set a new price target of $20, which is below Monday's close of $21.63. In Tuesday's session, Campbell was off 2.5% to $21.10.
It appears that more trouble is ahead for beleaguered Imclone (IMCL:Nasdaq - news - commentary - research - analysis) shareholders. On Tuesday, TheStreet.com reporter Adam Feuerstein reported that Erbitux, the company's cancer fighter, may be in danger of failing its European trials after testing showed it wasn't effective in helping colon cancer patients. Imclone was off 10.6% to $7.16.
Oxford Health (OHP:NYSE - news - commentary - research - analysis) saw its earnings tumble because of a big charge related to the settlement of suits prompted by a high-profile 1997 profit warning. Excluding the item, earnings were about a penny better than estimates. Oxford added to Monday's selloff, slipping 5% to $38.26.
On Tuesday morning, a report said marketing execs from Warner-Lambert, now a part of Pfizer (PFE:NYSE - news - commentary - research - analysis), tried to promote the epilepsy drug Neurotonin for an unapproved use back in 1997 instead of ordering additional clinical trials. The whiff of a new scandal sent investors scurrying from Pfizer stock, which was down 2.1% to $30.90.
In research notes, King Pharmaceuticals (KG:NYSE - news - commentary - research - analysis) was downgraded to hold from strong buy by Wachovia. Watson Pharmaceuticals (WPI:NYSE - news - commentary - research - analysis) was upped to strong buy from outperform by SG Cowen, which gave it a new price target of $35. The stocks moved in opposite directions, with King off 7.3% to $16.60 and Watson up 2.6% to $27.28.
Overall, both healthcare and pharmaceutical stocks were taking a beating. The American Stock Exchange Pharmaceutical Index was off 1.8%, while the Morgan Stanley/American Stock Exchange HMO Index was off 2.3%.
A published report said the talks between Prudential Financial (PRU:NYSE - news - commentary - research - analysis) and Wachovia (WB:NYSE - news - commentary - research - analysis) about combining their brokerage operations have fallen through. The nascent discussions had reportedly involved a joint venture that would've rivaled Merrill Lynch (MER:NYSE - news - commentary - research - analysis) in its retail scope. Both companies were soft on the news, with Prudential down 2.6% to $28.73 and Wachovia down 0.8% to $34.40.
Another drama in the securities industries continues, however, with reports that Citigroup (C:NYSE - news - commentary - research - analysis) Chairman Sandy Weill met last week with investigators from the National Association of Securities Dealers in their probe of Wall Street business practices. The meeting followed Weill's angry denial of reports last week that he'd broken ranks with the financial services giant after being told he was personally under investigation in the probe. No word on what was discussed at Friday's meeting. Citigroup was down 1.1% to $35.92.
Citigroup wasn't the only Blue Chip financial facing selling pressure. J.P. Morgan was down 4.5% to $20.30.
A report said AOL Time Warner (AOL:NYSE - news - commentary - research - analysis) Chairman Steve Case has privately raised the possibility of spinning off the America Online unit he founded almost 20 years ago and merged with Time Warner in January 2001. The Wall Street Journal said Case might just be blowing off steam after becoming the lightning rod for criticism about the merger's poor performance. AOL was down 2.3% to $14.35.
Cisco (CSCO:Nasdaq - news - commentary - research - analysis) was off 4.8% to $10.38 after being dropped to market perform from buy at CE Unterberg Towbin because of valuation and concerns that estimates will be reduced when the company reports earnings next week.
Meanwhile, Micron Technology's (MU:NYSE - news - commentary - research - analysis) earnings estimates were raised by Bear Stearns due to higher DRAM prices, but its stock was off 6.8% to $15.70.
Investors didn't stop with Micron. They sold off other rivals in the semiconductor industry as well, dropping the Philly Chipmakers 4.7%. Intel (INTC:Nasdaq - news - commentary - research - analysis) was off 3.4% to $16.24, Applied Materials (AMAT:Nasdaq - news - commentary - research - analysis) was down 6.7% to $14.10, while Xilinx (XLNX:Nasdaq - news - commentary - research - analysis) was down 7% to $17.74.
Overseas markets were much lower in the wake of the stateside selloff, with London's FTSE 100 losing 3.8% to 3936 and Germany's Xetra DAX falling 4.9% to 3043. In Asia, Japan's Nikkei gave up 0.6% to end at 8709, while Hong Kong's Hang Seng fell 2.2% to close at 9635.
Despite a deluge of positive analyst calls, stocks fell on Monday, with the Dow Jones Industrial Average losing 75 points, or 0.9%, to 8368.04, and the Nasdaq shedding 15 points, or 1.2%, to 1315.81. The one-day drop followed three weeks of gains and led some to worry the bear market was reasserting itself ahead of the GDP report later in the week and next week's Fed meeting.
Source:
http://www.thestreet.com/_tsclsii/markets/marketstory/10050798.html
