Some late afternoon comments from Salomon Smith Barney regarding their outlook on the semiconductor sector has stocks nearing their lows of the session.
During Salomon's Asia tech conference call there were several comments made regarding the firms tempered bullishness toward the semiconductors. For one, the firm said it expects 16% sequential unit growth for Q4 motherboards, with is lower than the normal seasonality of +20%. Second, the firm said it sees little cyclical pickup on PC upgrades. On the DDR side of things, Salomon expects prices to fall as Micron Technology (NYSE:MU) $14.28 +2.95% and Infineon Technology (NYSE:IFX) $8.95 +0.56% along with Samsung, Hynix and other Taiwanese company's increase supply. While Salomon doesn't think SDRAM prices will rise, it does think Q4 will be the order bottom at down 15%.
Those notes have found the Semiconductor Index (SOX.X) 323.95 +1.33% holding a 4.5 point gain, but 9-points off its afternoon high.
After a gap higher at the open ($9.64) after giving upside December quarter guidance of $132 million at the Lehman Brothers semiconductor conference, RF Micro Devices (NASDAQ:RFMD) $9.95 +8.5% holds those gains, but off session's best levels of $10.53. In October, RFMD gave revenue guidance of $128-$132 million, which was above the $130.4 million analyst consensus.
Dow breadth now wanes with the Dow Industrials (INDU) trading down 74 points (-0.86%) at 8,504 with a fade in SBC Communications (NYSE:SBC) 25.51 +1.27% leaving drug giant Merck (NYSE:MRK) $56.67 +2.32% the Dow's biggest gainer.
Dow components showing losses earlier in the session have been extended with AT&T (NYSE:T) $13.02 -5.3%, Wal-Mart (NYSE:WMT) $53.85 -2.8% and Citigroup (NYSE:C) $35.98 -2.52%.
Treasuries saw modest buying today with the December 10-year futures (ty02z) 113'285 +0.13% rising in price, while the benchmark bond's YIELD ($TNX.X) 4.019% slipped back underneath its 21-day SMA.
Some afternoon equity weakness came on the heals of the latest employment survey conducted by Manpower Inc. shows that hiring plans for the start of 2003 are more upbeat than a year ago, but that companies remain hesitant to aggressively expand payrolls.
While the hiring numbers have improved over a year ago, the latest quarterly survey from the staffing firm shows that a stalled economic recovery has left employers more cautious about job growth than they were just a few months ago.
Part of their hesitation, however, may be tied to seasonal factors and to what's typically a slower pace of hiring at the start of the year compared to later on.
Of the nearly 16,000 employers polled, 20% said they will take on more staff in the first quarter. That compares to 16% who said a year ago they planned to step up hiring in the first three months of 2002, but it's also down from the 24% who predicted expanding their payrolls in the current quarter.
While noting a continuing "high level of uncertainty among employers," Jeffrey Joerres, chairman and CEO of Manpower, said the survey data nonetheless "reveal hiring levels above those seen during the post-recessionary period of the early 1990s."
Meanwhile, 12% of the employers polled intend to cut their work force in the first quarter, higher than the 9% who expressed such plans for the fourth quarter. A year ago, 16% of firms in the survey expected to slash positions in the New Year.
Sixty-two percent of those companies surveyed plan to maintain their current staff levels, the same as for the 2002 fourth quarter, while 6% are uncertain. A year ago, 61% planned to maintain their current staff and 7% couldn't make a first-quarter prediction.