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Intra-day swing, but still steady

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The Treasury bond and equity markets have seen some intra-day swings this morning, and current action has both stocks and bonds at roughly unchanged levels.

The dip lower at the open for equities was reversed higher and we saw the major indexes actually challenge, if not briefly violation yesterday's highs. On the other side of things, a flat open in the bond market found selling, which had the benchmark 10-year Treasury YIELD ($TNX.X) spiking to 4.254%, but settling back now at 4.116%. While action in the bond market is followed on rumor that corporations are unwinding some of their Treasury bond holdings to fund pensions, intra-day action hints there are also some buyers nipping away at the higher YIELDS found recently.

Stocks were quick to respond to the bond market action as the Dow Industrials (INDU) 8,250 -0.29% jumped to a session high of 8,331, while the S&P 500 Index (SPX.X) 877 -0.15% rose to an intra-day high of 886.

The NASDAQ-100 Index (NDX.X) 941 -0.36% holds steady, despite weakness in the Semiconductor Index (SOX.X) 259 -2.55% after last night's North American Semiconductor Industry book-to-bill ratio for September came out at 0.84. This was well below Lehman's estimate of 1.06 and August's 1.14 reading. Industry observers note that the book-to-bill is a 3-month average and September's report hints that deterioration began in August, and that the decline between July and September was probably on the order of 50%. While this number was probably not a total surprise after this week's earning's from Intel (NASDAQ:INTC) $13.96, it does appear to have some carry-over impact in today's session.

Shares of NASDAQ-100 component and wireless technology company Qualcomm (NASDAQ:QCOM) $35.60 -1.08% have recovered from a gap lower to $34.52 after UBS commented that Sprint has inventory of 100 days, which UBS considers high.

Shares of networking giant Cisco Systems (NASDAQ:CSCO) $10.44 +2.65% rebound from an earlier low of $9.92, after Pacific Crest cut its revenue estimate for the current quarter and reduced its FY03 EPS estimate to $0.50 from $0.54, with the average consensus estimate at $0.54. Pacific Crest cited recent comments from PMCS, AMCC, XLNX, JNPR, EXTR and BRCM about those companies still seeing weaker enterprise spending.

Lucent (NYSE:LU) $0.71 -6.6% announced today that its board of directors has authorized it to seek shareowner approval for a reverse stock split at its next annual meeting in February 2003. The ratio proposed will be set at a level which would be expected to result in a common share price in the range of $15-$25.

Volume is running just below average this time of day on an option expiration Friday, with NYSE volume just above the 860 million mark, but NASDAQ volume average at 1 billion share.

Market internals are mixed with a slightly negative tone in the NYSE with decliners having the upper hand on advancers by an 8 to 7 margin. Meanwhile, NASDAQ is just above even breadth with advancers holding a slight edge at 15 to 14.

New highs versus new lows has the NYSE showing 19 stocks hitting new highs versus 77 stocks at new lows, while NASDAQ shows 15 stocks breaking to new highs and 42 dropping to new lows.

Jeff Bailey

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