US Stocks Down As Focus Returns To Earnings

Dow Jones Newswires/WSJ.com | April 9, 2003 | Stacy Forster

[Starwind]

US Stocks Down As Focus Returns To Earnings

By Stacy Forster of THE WALL STREET JOURNAL ONLINE.

NEW YORK (Dow Jones)--Even the spectacle of Saddam Hussein's statue being toppled in Baghdad can't keep stocks from falling Thursday as attention turns to earnings once again.

Stocks had posted gains throughout the morning as the celebration in Baghdad continued. But by midday, the Dow Jones Industrial Average had slipped back; it was recently down 48 points to 8250, while the technology-heavy Nasdaq Composite Index lost 15 points to 1368. The dollar surged and bonds were higher.

"The market has already concluded that the war is over, and what we're seeing is a response to the fact that the Iraqi people are welcoming us," said Alfred Goldman, chief market strategist at A.G. Edwards & Sons in St. Louis. "This is the first step in winning the peace, which is just as important as winning the war."

Although analysts say investors are now confident of a victory, some are uncertain about the toll the war has taken on the already weak U.S. economy. Recently, concerns have widened to include the quality of first-period earnings, as reports begin to trickle in for the previous quarter.

Trading has been sluggish in recent weeks as investors had little else to focus on besides war developments, and market watchers expect the trend toward muted activity along with contracted volume to persist.

"On one hand, there's the celebration of victory, but there's also the reality that the fundamental nuts and bolts aren't too pleasing," said Larry Wachtel, market strategist for Prudential Securities in New York. "We're looking [at the war] in the rear-view mirror, but we're going to get poor economic numbers and slack earnings reports."

Now that investors are once again paying attention to corporate earnings, they may be disappointed. Among 1,002 companies issuing quarterly forecasts, 58% have guided estimates downward, 22% have confirmed analysts' expectations and 20% have guided estimates upward, according to data compiled by the firm.

"Everyone knows the economy hit a wall in February, but the first quarter is behind us and people are now going to start thinking about the second half of the year," Goldman said.

Still, earnings warnings from companies such as computer-chip maker Microchip Technology and integrated-circuit supplier RF Micro Devices on Tuesday were enough to overshadow encouraging developments in the war in Iraq.

The Dow industrials finished down 1.49 points, or 0.02%, at 8298.92. The tech-dominated Nasdaq Composite Index fell 6.57 points, or 0.5%, to 1382.94, and the broad S&P 500-stock index shed 1.64 points, or 0.2%, to 878.29.

The earnings genie may now be out of the bottle. Early Wednesday, Abbott Laboratories said net income fell 6.2%, in line with the Abbott Park, Ill., drug maker's forecast in March. Sales rose 9.3%, slightly better than analysts had expected. Shares of Abbott gained 1.7% on the New York Stock Exchange.

Among other stocks to watch was Yahoo, which is expected to report results after the close of trading Wednesday. The majority of companies are scheduled to report results over the next few weeks. Shares of Yahoo were down 2.9% on the Nasdaq.

News Corp. is putting final touches on a deal to acquire a 35% controlling stake in Hughes Electronics, home of DirecTV, in a $6 billion deal. On the Big Board, shares of News Corp. were down modestly, while Hughes added 1.9%.

Shares of Motorola lost 2.9% on the NYSE. Analysts at Needham & Co. downgraded the handset-maker to "hold" from "buy," citing concerns regarding the strength of the handset business and a challenging environment that makes it likely investors will see downsizing of current estimates in the next few quarters.

For continuously updated news from The Wall Street Journal, see WSJ.com at http://wsj.com. .

(END) Dow Jones Newswires

04-09-03 1332ET- - 01 32 PM EDT 04-09-03

[Starwind]

Now that investors are once again paying attention to corporate earnings, they may be disappointed. Among 1,002 companies issuing quarterly forecasts, 58% have guided estimates downward, 22% have confirmed analysts' expectations and 20% have guided estimates upward, according to data compiled by the firm.

First Call has that as 58% will miss analysts estimates.

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STOP BY AND BUMP THE FUNDRAISER THREAD

[Chancellor Palpatine]

Can't win for losing - I keep wondering what kind of liberal dems sit as directors, analysts and advisors of thos big pensions and the zillions of mutual funds that keep seeing GOP success as a reason to sell off and not buy.

[Doctor Stochastic]

It's the economy.

So far Bush's handling on the economy hasn't risen to the level of his wartime successes.

[Steven W.]

it's not that - it's just that the "war rally" was one of the most expected of market history and actually misstarted a month or so back on rumors of UBL or his sons being caught and started up, prematurely, from then. Since then there have been some significant rallies and at this point there is nothing wrong with some profit taking in order (in fact it's healthy)

[Starwind]

mutual funds that keep seeing GOP success as a reason to sell off and not buy.

This isn't about the GOP, the War, Bush, Gold, or Democrats.

I don't fault Bush for his leadership. I fault both the R's and D's over the last 10 years for their collective mismanagement of government, but the Lion's share of the blame goes to Alan Greenspan for pumping the money supply in the mid-late 90's and then throttling it in 2000.

It's about the economy.

[Steven W.]

don't forget the over-raising of interest rates during the 2000 election campaign at the pressuring of Clintonistas to proclaim "the economy is so hot it's overheating! we have to raise interest rates!" as they brought the economy crashing into recession 1/2000-3/2000.

[Steven W.]

Bush's handling of the economy has been fine - tax policies brought the country out of recession in the nick of time. Unfortunately we had a terrorist attack and now two wars of liberation. Those take a toll on economic conditions and corporate sentiments. At this time, though, it's going to be full speed ahead and the goldbugs have started feeling the heat, thus the focus on the past, not the future which, if you have any faith in America and free economics, will be brighter than those whose interests lie elsewhere would like folks to accept or believe. (in other words economic naysayers, hedge fund shorts & goldbugs will now continue to become an even more vocal domestic equivalent of Baghdad Bob)

[Starwind]

US Stocks Down As Earnings Serve As Damper

By Cynthia Schreiber of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Stocks are down as investors respond to a flow of disappointing earnings reports.

"There's just no conviction to continue to put money into the market," said trader Christina Kelerchian of Deutsche Investment Management. "We are waiting to see these earnings come out and to see where we can go from here."

Investors are getting some color from companies that service the financial industry. Bisys Group, which provides outsourcing services to financial institutions, cut its fiscal third-quarter earnings guidance, which sent shares down 13%, or $2.27, to $15.01.

Dun & Bradstreet, the business-data firm, expects first-quarter revenue to decline slightly because of cautious spending by customers. Its shares are down 12%, or $4.72, to $34.72.

Meanwhile, optical-equipment maker Drexler Technology said it will miss analysts' average forecast for the fourth quarter because expected orders from Europe and the Middle East didn't materialize. Its shares are off 9.7%, or $1.45, to $13.52.

Skittish before Yahoo reports its first-quarter earnings report after the closing bell, investors are taking shares down 4.2%, or 99 cents, to $22.83.

Aside from earnings, some good news is emerging. Investors appear to be focusing on positive feedback about Abbott Laboratories' Humira drug for rheumatoid arthritis, rather than on the company narrowly missing sales projections for the first quarter. Abbott's stock is up 1%, or 41 cents, to $40.34.

GTECH Holdings hit a 52-week high after the company said it renewed a deal to run Brazil's lottery system - one of its largest contracts. The company reports Thursday, and its stock is up 9%, or $2.96, to $36.29.

AK Steel Holdings is surging nearly 14% as talks to reach a labor contract with its union continue. The contract is necessary if the company is to acquire National Steel, which filed for bankruptcy. AK Steel stock is higher by 13.9%, or 48 cents, to $3.94.

The Dow Jones Industrial Average is off 65.47 points, or 0.8%, to 8233.73, the Nasdaq Composite Index is down 19.29, or 1.4%, to 1367.84, and the Standard & Poor's 500-stock has shed 8.42, or 0.9%, to 869.88.

The Russell 2000 Index of small stocks has fallen 1.03, or 0.27%, to 373.64, and the Standard & Poor's SmallCap 600 Index has erased 0.7, or 0.37%, to 187.54. Volume on the New York Stock Exchange is 869 million shares, with down volume ahead of up, 584 million to 265 million. Decliners outpace advancers, 1721 to 1470.

Volume on the Nasdaq is 661 million shares, with down volume ahead of up, 147 million to 498 million. Decliners outpace advancers, 1623 to 1265.

-By Cynthia Schreiber, Dow Jones Newswires; 201-938-2408; cynthia.schreiber@dowjones.com. .

(END) Dow Jones Newswires

04-09-03 1445ET- - 02 45 PM EDT 04-09-03

[Starwind]

First Albany's Johnson: Postwar Rally Took Place Monday

NEW YORK (Dow Jones)--The stock market gains on Monday represented a postwar victory rally, said Hugh Johnson, chief investment officer at First Albany Asset Management.

Investors were "unwinding the positions" they built "in anticipation of the end of the war," Johnson said in a CNBC interview Wednesday.

The market now needs to see a stronger economy, which won't happen without a drop in oil prices, he said.

Also interviewed by CNBC Wednesday, Brian Wesbury, an economist at Griffin Kubik Stephens & Thompson, agreed that the expected postwar rally most likely occurred Monday.

While he said questions remain about the health of the economy, he described the U.S. economy as "a loaded spring ready to uncoil."

In order for the economy to reach that potential, however, Congress must pass tax cuts, he said.

At one point Monday, the Dow Jones Industrial Average was up 243 points, but it finished the day up only 23.

-Andrew Gelfand; Dow Jones Newswires; 201-938-2007 .

(END) Dow Jones Newswires

04-09-03 1448ET- - 02 48 PM EDT 04-09-03

[Steven W.]

While he said questions remain about the health of the economy, he described the U.S. economy as "a loaded spring ready to uncoil." In order for the economy to reach that potential, however, Congress must pass tax cuts, he said.

[MHT]

Managed hedge funds with millions from the likes of Michael Eisner and Julia Roberts are selling short and helping keep the market deflated. Furthermore, if you want to look at a market-maker with a real agenda, check out Buffett. He knew the Clinton years were fueled by fraudulent economic overestimates from the Treasury and Commerce departments but said nothing. He knew that the tech boom was fueled by the equivalent of the emporer's news clothes and the mania of style over substance, technical possibilities over fundamentals.

Now he decides to speak up. He hates conservatives, particularly Bush, and his wife is even more vocal in her dislike for W. Now the great seer has the power to make self-fulfilling prophesies about the market. I do not think that he can be regarded as anything but a man with a powerful political agenda, the equivalent to Bush 41's Perot.

[Steven W.]

you make a good point and something I've been perplexed by - because his comments fly in the face of his actions, buying stuff on the cheap, etc., and Coke (KO) + many other of his currently held investments sit at prices + P/E's not seen for years.

[EaglesUpForever]

So far Bush's handling on the economy hasn't risen to the level of his wartime successes.

Just what would you like to see him doing? I think Bush's handling of the economy has been great, considering the hand he was dealt by Clinton:

1. A devastating terrorist act, 9/11, due to Clinton's subjegation of our national security infrasctructure into a role of camoflouge for his personal scandals rather than functional military action. Clinton chose to treat Al Queda with theatre rather than action, and the USA economy was dealt a severe blow as a result.
2. Failure of Clinton to address previous deep problems with the economy: junk bonds, derivatives, manipulation of Gold, etc., etc. as Clinton focused only on staying in power and milking his position for personal gain.
3. Failure of Clinton to prevent the excesses of the dot com era, as he was too busy with self-inflicted scandals.
4. Failure of Clinton as an ethical role model: his presence in office for 8 years set an example for all leaders in society that you get ahead by being as unethical as possible.

Give Bush a break!

Another point... Even if you pretend Bush has failed economically, at least you must grant that victory in Iraq will benefit the economy immensely. And no recent or pending Democratic candidate would have ever done anything to upset the status quo in Iraq.

[Doctor Stochastic]

A successful conclusion to the War On Iraq will be of great benefit to the economy in a few years as the oil comes back online (not so much because of a price lowering as because of price stability.)

On the other hand Clinton isn't president. Clinton hasn't been president for some years now. The question is when will Bush do something about the economy? Bush and the Cabinet have been talking war for some time. They need to go out and push their economic reforms with the same vigor. They can't even get a tax cut through the Extreme-Right-Wing-Republican-Controlled Congress.

Continuing to blame Clinton wears thin rather quickly. (Although it does remind the unemployed that they used to have jobs.)