f-h OP BW & Friends-TTT, Dienstach 16.03.2004
CHICAGO (AFX) -- The dollar remained lower against its major rivals amid an
outlook for continued low U.S. interest rates. Low rates relative to other
regions cuts the attractiveness of the dollar to foreign investors. The
greenback was down 0.3 percent against the euro, with one euro worth $1.2287.
The dollar remained sharply lower against its Japanese counterpart, at 108.80
yen per dollar. The Fed opted to keep its interest rate target at a 45-year low
of 1 percent. The vote was unanimous. The FOMC said that new hiring has lagged
since the last meeting on Jan. 28. The FOMC did not change its wording on the
inflation outlook, saying the risks of deflation and rising prices are almost
equal.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Greetz f-h
NEW YORK (AFX) - U.S. stocks rose Tuesday but the blue chips culled gains
inspired by a strong profit outlook from 3M after the Federal Reserve expressed
concern about job growth while unsurprisingly keeping rates intact.
The Dow rallied immediately following the Fed's announcement to leave rates at
their 45-year low but it quickly pulled back as traders sifted through the
accompanying statement, which continued to say the government would practice an
accommodative money policy, and kept wording on the outlook for inflation,
saying the risks of deflation and rising prices are almost equal.
Prior to the statement, the blue chips were up about 77 points. The index
briefly spiked about 20 points, before reversing course as the Fed noted new
hiring has lagged since its last meeting on Jan. 28. The Nasdaq followed roughly
the same pattern.
At last check, the Dow Jones Industrial Average was up about 64 points, or 0.7
percent, to 10,167, while the Nasdaq Composite added 2.45 points to 1,941.10.
At their peaks for the day, the indexes stood at 10,221.11 and 1,961.99,
respectively.
The broad S&P 500 index rose 0.4 percent to 1,109.22, while the Russell 2000
index of small-cap stocks slipped 0.1 percent to 566.14.
"All they did was to take last month's statement and spit it out again," said
Paul Nolte, director of investments at Hinsdale Associates. "They just changed
the date at the top of the memo."
Nolte said the Fed is waiting for a pick-up in the economy before tipping its
hat to an eventual rate hike, and "they haven't seen enough to make any changes
to their stance.
The muddled action comes after the major equity averages closed Monday at their
lowest levels since mid-December. The strong bull run that started 2004 and sent
the Dow to an intra-day high of 10,753.63 on Feb. 19 has obviously stalled,
however, with the blue-chip barometer now sitting well below where it ended 2003
at 10,453.92.
3M shares propelled the blue-chip barometer higher, gaining more than 5
percent after the company lifted its outlook for first-quarter earnings. The
diversified firm, whose products range from chemicals to adhesives, now sees a
profit of 86 to 88 cents per share, up from its prior outlook for earnings of 80
to 82 cents per share.
The company, which also boosted its view for the full year, cited continued
strength in the company's display and graphics business and growth in many of
its industrial businesses. Smith Barney upped its rating on the stock to "buy"
following the news.
Monday's weakness was driven by renewed terrorism fears with evidence mounting
of al-Qaida's possible involvement in last week's deadly train bombings in
Spain. The week's action comes against the backdrop of continuing valuation
concerns following 2003's stellar returns.
Byron Wien, U.S. equity strategist with Morgan Stanley, isn't surprised by the
recent pullback in stocks.
"The current correction in the stock market was inevitable and is probably not
over," he told clients in brief research note. "When it is over I expect it to
be greater than 5 percent (pullback from highs) but less than 10 percent."
Wien, however, reiterated the firm's 2004 target of 1,300 for the S&P 500, and
said he views the correction as a buying opportunity. He advised focusing on
areas like healthcare, energy, industrials, and some materials.
Breadth within the Dow was positive with gainers outpacing losers, 23 to 7. The
notable winners among the blue chips included Alcoa, Caterpillar, Citigroup,
DuPont, and Home Depot. The biggest losers were AmEx, Boeing, Eastman Kodak, and
Honeywell.
In the broad market, advancers ran ahead of decliners on the New York Stock
Exchange, 18 to 14, but breadth was the opposite on Nasdaq with losers outpacing
winners, 17 to 14. Volume was a relatively light 977 million on the Big Board
and 1.33 billion on the Nasdaq.
Economic data
Tuesday's economic data revealed construction of new U.S. houses slowed about 4
percent in February to 1.86 million seasonally adjusted annualized units,
according to Commerce Department estimates.
The figure represents the slowest pace of building since August. Economists were
looking for starts to accelerate slightly to about 1.91 million in February,
according to a survey conducted by CBS MarketWatch.
In addition, January's starts were revised higher to 1.93 million from the
previous estimate of 1.90 million. Starts of single-family homes fell about 4
percent to 1.49 million in February, the slowest since May. Building permits,
considered a leading economic indicator, fell about 1.5 percent to 1.90 million
annual units.
Also, a survey from staffing firm Manpower found that U.S. employers are more
optimistic about hiring than they've been in three years.
U.S. weekly chain store sales rose in the latest week as more consumers took tax
refund dollars and spent them on discretionary items, according to the ICSC-UBS
weekly chain store index. The index rose 0.5 percent in the week ended March 13.
This is the first increase in chain store sales since the week ended February
14.
The index rose 7.0 percent year-over-year, unchanged from the previous week. The
year-over-year comparisons benefit from weak sales last March when the Iraq war
was launched. ICSC-UBS raised its March sales forecast to 6.5 percent, compared
with the previous estimate of about a 6.0 percent rise. Sales rose 6.7 percent
in February.
Dollar, bonds, oil, gold
The U.S. dollar slid against its European and Japanese counterparts following a
report that the Bank of Japan is considering an exit strategy for its
dollar-buying interventions.
Benchmark 10-year Treasury notes slipped on the expectations that the purchase
of U.S. debt Japan could dwindle.
Oil futures eased back after a more than $1-per-barrel climb in the previous
session, but prices held above the $37 level as traders sorted through market
estimates on this week's U.S. petroleum supply updates.
Investors took refuge in the gold market following continued weakness in the
U.S. dollar, sending gold futures higher for a second session to their highest
level in a week.
Another big banking deal, Strong Q1 from Lehman
The mergers kept coming early Tuesday as BancWest agreed to acquire Community
First Bankshares in a cash deal valued at $1.2 billion.
Under the terms of the deal, BancWest will pay $32.25 for each Community First
share, a 15 percent premium. BancWest is a subsidiary of French bank BNP
Paribas. BNP shares gained over 1 percent in Paris.
On the earnings front, Lehman Brothers reported first-quarter net income of
$670 million, or $2.21 per share, up from with $301 million, or $1.15 per share
in the year-ago period.
The investment bank cited record performance in its capital markets and client
services units. A survey of analysts by Thomson First Call forecasted earnings
of $1.62 for Lehman Brothers. Revenue rose to $3.1 billion in the latest three
months, and up from $1.7 billion in the same period a year earlier. Wall
Street's consensus estimate was for revenue of $2.49 billion in the February
period. The stock added 1 percent to $85.48.
Also, in a deal between two Dow components, Hewlett-Packard agreed to assume
operation of Procter & Gamble's accounts payable operations as part of an
expansion of the companies' current $3 billion, 10-year outsourcing contract.
H-P would not disclose the amount of the expanded services deal, which is
expected to be signed in April. H-P shares rose 0.1 percent, while P&G's stock
added 0.3 percent.
In notable analyst moves, Merrill Lynch raised its rating on State Street bank
to "buy" from "neutral" citing valuation. The firm continues to "forecast faster
revenue and earnings per share growth for State Street vs. trust bank peers for
2004 and 2005, and we think the stock deserves a premium valuation to peers
given the faster growth and a higher fee component of the business mix." State
Street shares rallied more than 4 percent to $51.99.
Mama.com was a standout on the Nasdaq, soaring more than 28 percent to $10.08
on heavy volume of 22 million. An SEC filing revealed that Mark Cuban, the owner
of the NBA's Dallas Mavericks and an Internet billionaire who sold Broadcast.com
to Yahoo for hefty profit during the boom in Web stocks, has assumed a 6.3
percent stake in the company.
For other individual stocks in the spotlight, check out
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Greetz f-h
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