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Incomes and spending both show 0.4% rise

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This morning's early economic data shows that personal income and spending both rose 0.4% in January despite a drop in wages and salaries. Real disposable incomes rose 1.5% as tax payments fell at an annual rate of 6.2%. Without special one-time factors, such as the tax cut, increases in Social Security benefits, and a federal pay raise, disposable income rose 0.2%.

The personal income rise of 0.4% was slightly ahead of economist's consensus for a 0.2% gain, while the personal spending gain of 0.4% was a little higher than estimates of a 0.1% gain.

While both numbers are a positive for the market, they should have little impact on today's trading.

Later today, investors will be watching the Institute of Supply Management Index (ISM ) numbers that are due out at 10:00 AM EST, which is a broader pulse on activity at the nations factories. Economists are looking for a rise in this number to the 50.5% level. Readings above the 50% are associated with a pickup in activity at factories.

Stock futures higher

Stock futures are showing gains this morning as S&P futures trade up 5.6 points at 1,112. NASDAQ futures are higher by 1,372 and Dow futures are up 58 points at 10,158.

Fair value for the S&P 500 today is $0.08. HL Camp & Company has their computers set for program buying at $1.38 and set for selling at $-0.82. Fair value for the NASDAQ-100 today is $1.85.

Stock futures are trading above their respective fair value, so traders are looking at a higher open for stocks.

Invitrogen guides lower

Shares of biotech Invitrogen (NASDAQ:IVGN) $45.64 are trading lower in heavy volume at $33.00 (-27%) adding further to yesterday's losses amid talk that one analyst was taking a cautious position ahead of last night's earnings in which the company did meet Q4 estimates of $0.38 a share, but then announced that Q1 revenues and earnings would fall short due to currency exchange rates and weakness in its core molecular biology business. Several firms have downgraded the stock this morning.

Sprint reduced capital expenditure

Sprint Corporation (NYSE:FON) $14.09 said it will reduce capex by $400 million to $6.4 billion due to the high likelihood of either significant delay or termination of the availability of the NextWave spectrum. FON now expects the PCS Group (NYSE:PCS) $9.20 financing needs for 2002 to be $300 million below previous guidance. As a result of reduced capex, FON now expects FON Group to be free cash flow positive for FY02. Both the PCS Group and FON Group are expected to be free cash flow positive for FY03.

Sprint (FON) also addressed liquidity concerns of late, by saying that it has outlined a series of steps that will increase it financial flexibility and address the MARKET'S current concerns about the company's liquidity. The company has signed a commitment letter with Citibank (NYSE:C) and Deutsche Bank AG for a $1 billion term loan facility. The commitment, which is fully incremental to Sprint's existing $5 billion revolving credit, is for a nine-month loan secured by the assets of Sprint's directory publishing business. In addition, Sprint's incremental 2002 cash requirements are expected to be reduced to approximately $1.0 billion from $1.7 billion.

Jeff Bailey
Senior Market Technician
Option Investor

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