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Stocks edge lower for second straight session

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It has been more than a month since equities have finished lower for two-consecutive. Should the major indexes close lower by today's session end, it would market the first time since October 7th that the major market averages had two consecutive lower closes and may be taking a rest.

This morning's action saw equities hovering either side of unchanged level, but have slowly moved lower as the session progresses.

Sector losers have the Morgan Stanley Health Provider Index (RXH.X) 271 -10.7% trying to firm at its session low as component Tenet Healthcare (NYSE:THC) $15.40 -44% leads the group lower and is today's most actively traded stock in the market at over 79 million shares.

Since our downside alert at $20 in the market monitor at OptionInvestor.com, shares of Syncor Intl. (NASDAQ:SCOR) $17.98 -20% have sunk to a session low of $17.35 on concerns that potential violations of the Foreign Corrupt Practices Act may have the company's merger with Cardinal Health (NYSE:CAH) $66.50 -3.24% in jeopardy.

Treasuries, especially the longer-dated maturities continue to attract cash and have YIELDS falling as the benchmark 10-year Treasury December futures (ty02z) 115'010 +0.21% and 30-year December futures (us02z) 112'31 +0.92% gain ground. This has both YIELDS falling rather sharply for a second straight session to YIELD 3.847% and 4.789% respectively.

Current trading has the Dow Industrials (INDU) 8,545 -0.47% falling just 41 points as index components SBC Communications (NYSE:SBC) $27.40 +2.3%, Caterpillar (NYSE:CAT) $43.29 +1.76%, Citigroup (NYSE:C) $37.04 +1.6% and Boeing (NYSE:BA) $32.74 +1.39% offset losses in McDonald's (NYSE:MCD) $17.48 -9.47%, General Electric (NYSE:GE) $25.01 -4.2% and Walt Disney (NYSE:DIS) $17.53 -3.99%.

Earlier this morning, McDonald's (MCD) warned for the 7th time in 8 quarters saying that based on recent sales performance and restructuring plan, the company does not expect to achieve its previously announced 2002 earnings per share target. MCD plans to eliminate 400-600 positions to control costs and reallocate resources and will close approximately 175 underperforming units in about 10 countries.

After beating quarterly earnings estimates handily, wireless technology developer Qualcomm (NASDAQ:QCOM) $35.09 +0.42% holds onto marginal gains after trading an intraday high of $36.16. Recent week's highs have been finding some resistance at that $36 level and today's inability to break higher on bullish news may have some QCOM locking in some gains.

Sector strength is limited with the Pharmaceutical Index (DRG.X) 317 +1.01% the only sector currently showing a gain of greater than 1%. The Oil Index (OIX.X) 254 +0.67%, S&P Insurance (IUX.X) 266 +0.52% and Dow Transports (TRAN) 2,352 +0.08% are holding marginal gains.

Volume is almost identical to yesterday's volume at this hour with the NYSE just approaching the 900 million mark, while NASDAQ volume is just over the 1 billion level.

Breadth is almost identical too with NYSE breadth negative with 5 stocks declining for every 3 advancers, while NASDAQ breadth is slightly bearish at 3 to 2.

NASDAQ new highs versus new lows is holding up with 29 stocks hitting new 52-week highs versus 22 stocks trading new 52-week lows. The more institutionally traded/invested NYSE is bearish with just 13 stocks trading a new 52-week high compared to 26 stocks trading new lows.

Jeff Bailey

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