After a lower open, technology stocks have been attempting to buck a more negative beat as the NASDAQ Composite (COMPX) 1,326 +0.92% and NASDAQ-100 Index (NDX.X) 956 +1.2% show gains with morning strength found in the Disk Drive Index (DDX.X) 61.19 +2.82% and Biotech Index (BTK.X) 360 +1.7%.
Shares of Yahoo! Inc. (NASDAQ:YHOO) $10.30 +12.7% have recouped most of yesterday's losses after Merrill Lynch upgraded the stock to "neutral" from "reduce/sell" following a 15% decline yesterday which the firm believes is due to the sale of 30 million YHOO shares by Softbank. At $9.13 (yesterday's close), Merrill has the stock trading at 10-times the firm's 2003 EBITDA estimate, which is a discount to other large Internet stocks (EBAY 26x and AMZN 25x) and is in-line with traditional media names (AOL, FOX, DIS, Viacom). Merrill believes YHOO is likely to remain range- bound near $10 until investors gain confidence in a rebound in the online ad market.
Gains in YAHOO have helped the CBOE Internet Index (INX.X) 69.01 +1.79% recover back to a trending lower 50-day MA, which currently resides at 69.20.
Weakness in the Dow Transports (TRAN) 2,258 -2.35% is found after this morning's earnings warning from index component Roadway Corporation (NASDAQ:ROAD) $23.10 -14.22%. Other "trucking" related stocks in the index have US Freightways (NASDAQ:USFC) $27.75 -7.3% and Yellow Corp. (NASDAQ:YELL) $23.00 -3.36% under pressure. NYSE listed CNF Inc. (NYSE:CNF) $30.75 -1.94% is also under pressure.
Dow Transports Components (TRAN) - Sorted by Net% change
The Dow Transports (TRAN) show two trucking-related stocks holding the top percentage loser in the group today with 3 trucking stocks in the top 4. Commercial airliner UAL Corp. (NYSE:UAL) $3.10 -5.48% breaks up a 1,2,3 positioning for the truckers, while other commercial airliner components have LUV, DAL and AMR showing gains. A quick look at the Airline Index (XAL.X) 46.69 +0.04% shows the sector holding onto a marginal gain.
Both the S&P 500 Index (SPX.X) 912 -0.6% and Dow Industrials (INDU) 8,631 -0.71% trade in the red after yesterday's triple- bottom sell signals on the respective $5 and $50 box charts.
Hurting the Dow and S&P 500 today was Lehman Brothers trimming of earnings estimates on conglomerate General Electric (NYSE:GE) $30.35 -3.13% on the belief that the company's pension income could be $300 million lower in 2003, worth $-0.02 cost to EPS, expensing of stock options costing anouther $-0.01 EPS, and that Lehman's updated Aircraft Engines and Power Systems 2003 forecast has a combined negative impact of $-0.02 EPS. In all, Lehman lowered GE's 2003 earnings estimates to $1.76 from $1.81, which is now 5-cents below consensus of $1.81.
Also weighing on the Dow Industrials and the Morgan Stanley Cyclical Index (CYC.X) 477 -1.17% is follow through weakness from yesterday in shares of Alcoa (NYSE:AA) $24.47 -2.39%.
Intraday breadth is a bit of a flipflop from what we've seen in recent weeks with negative breadth at the NYSE with decliners outnumbering advancers by a 4 to 3 margin, while breadth is positive at the NASDAQ with advancers outpacing decliners by a 4 to 3 margin.
Deterioration is found in the new highs versus new lows category at both the NYSE and NASDAQ. The big board has 20 stocks hitting new 52-week highs versus a starting to build 25 stocks at new lows, while recent narrowing of this indicator at the NASDAQ widens once again with 60 stocks hitting new lows versus just 13 achieving new 52-week highs.
Treasuries continue to see buying again today as YIELDS are lower across the major maturities. Current analysis for NASDAQ bullishness is simply some short covering after the recent couple of session's sharp declines.