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A bit of a drop, but not much "pop"

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The major indexes are seeing mixed action after a drop at the open and slight rebound in late-morning trade as the Dow Industrials (INDU) 8,389 -0.61% finds a 52-point decline after testing today's S1 pivot analysis support of 8,390, while the NASDAQ-100 Index (NDX.X) 1,017 +0.82% finds a gain of 7.6 points and rebounds from its daily pivot analysis S1 support of 1,003 and tries to hold its daily pivot of 1,016.

Sectors are finding mixed action, just like the major indexes with strength limited to the Networking Index (NWX.X) 157.14 +1.9%, Fiber Optic (FOP.X) 53.61 +1.36%, CBOE Internet (INX.X) 96.15 +1.16% and Disk Drive Index (DDX.X) 76.30 +1.19%.

Networking stocks are strong on the heels of Lucent's (NYSE:LU) $1.76 +4.76% earnings reported this morning where the company said Q1 losses of $0.15 (excluding items), which were better than the Street's estimates for a $0.21 per share loss have the company on track to return to profitability by year's end. Lucent said its Q1 (December) revenues fell 42% year-over-year to $2.08 billion, but for upcoming Q2, sees some marginal revenue growth prospects to $2.5 billion, which was above consensus estimates of $2.39 billion.

The Dow Industrials losses are largely attributed to Eastman Kodak (NYSE:EK) $33.82 -10% after it reported Q4 earnings this morning of $0.65 per share, which was 2-cents below estimates. Weakness in today's trade is the company saying that upcoming Q1 earnings are estimated at $0.13, which was guidance well below consensus estimates of $0.28. Eastman Kodak also gave a wide range of full year 2003 guidance with a range of $2.35-$2.95, compared to current analyst's estimates of $2.71.

Eastman Kodak said "While the economy constrained sales, profit rose as we cut costs, improved our manufacturing productivity and introduced a number of exciting new products, including the latest EasyShare consumer digital cameras..... Additionally, we generated more cash flow than initially forecast, paid down debt and reduced inventory, reflecting improved financial management of the company." Kodak also said it will continue to cut costs by cutting approximately 2,300-2,900 employees from its payroll in 2003, which is about 3.5% of its current 70,000 employees.

With the Dow Industrials trading rather bearish, it is my view that it will be tough for the other major indexes to build much of a gain today, but any leadership would most likely be found from the NASDAQ-100 Index (NDX.X) which currently hovers around its daily pivot. If the Dow can't break free of its current slump, look for technology bulls to cave in with today's gains as the Dow weighs on investor psychology.

Sector weakness that is notable today is found in the Securities Broker Dealer Index (XBD.X) 401.95 -2.55% as it leads financial sector weakness and violates December's lows. Most likely the action here is spurred on by Credit Suisse's (NYSE:CSR) $22.41 -4.5% comments earlier this morning, while Dow component J.P. Morgan (NYSE:JPM) $24.96 -1.8% trades lower after reporting earnings (losses) this morning that met analyst's estimates.

Jeff Bailey

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