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Wait and see approach

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The major indexes are off their lows of the session, but are still witnessing a modestly negative trade with the Dow Industrials (INDU) 8174 now down 18-points and lifting from a session low of 8,141.

Technology sectors, along with the NASDAQ-100 Index (NDX.X) 1,064 –1.64% continue to trade weak in today’s session, with software maker Oracle (NASDAQ:ORCL) $11.19 –8.57% leading the GSTI Software Index (GSO.X) 106.72 –3.77% lower. Other GSTI Software Index components have PeopleSoft (NASDAQ:PSFT) $16.74 –8.21%, Internet Security Systems (NASDAQ:ISSX) $10.96 –7.6%, BEA Systems (NASDAQ:BEAS) $11.01 –7.6% and BMC Software (NYSE:BMC) $17.22 –7.4% after Oracle’s cautious quarterly guidance. GSTI Software components bucking today’s negative trade have shares of BroadVision (NASDAQ:BVSN) $3.80 +1.3% and RedHat (NASDAQ:RHAT) $6.01 +1.17% showing gains.

After being halted for trading earlier this morning, shares of USA Interactive (NASDAQ:USAI) $24.29 –8.3% and Expedia (NASDAQ:EXPE) $46.45 +19.4% have been released for trade. In today’s 12:00 PM EST audioconference, USAI announced it would acquire the remaining EXPE shares it does not currently own in a transaction valued at $3.3 billion. USAI also said that it believes that it will meet its current 2003 "budgeted adjusted EPS" of $0.75, saying that EXPE is trending toward Q1 EPS of at least $0.25 on $194 million in revenues (consensus $0.22 and $185.9 million), and announces that its Board of Directors has authorized the repurchase of up to 30 million shares of USAI common stock.

Shares of Hotels.com (NASDAQ:ROOM) $53.17 –0.39% now show a fractional loss after falling to a morning low of $47.75. USAI also owns a majority stake in this online discount travel website on what looks to be a relief rally trade when USAI reaffirmed prior guidance.

While the major indexes have been under marginal selling pressure today, financial sectors such as the S&P Banks Index (BIX.X) 272 +0.56%, KBW Bank Index (BKX.X) 727 +0.72%, Securities Broker/Dealer Index (XBD.X) 389 –0.34% and Insurance Index (IUX.X) 235 +1.03% have been holding at or above unchanged levels, and this looks to have given some support the the very broad and more institutionally held NYSE Composite (NYA.X) 4,817 +0.34%. I would view this action as somewhat positive, and perhaps indicative of some profit taking underway, but not necessarily indicative of a more negative trade that would have investors/traders looking to move to the sidelines on an extended basis.

Lending some “credence” to the above thoughts is another strong round of selling taking place in Treasuries today, which is evenly distributed among the major maturities. The benchmark 10-year YIELD ($TNX.X) is on the rise at 3.961% and now looks to try and get back above our upward trend from the October lows to the December 31st pullback low of 3.759%. With the U.S. Dollar showing strength as depicted by the U.S. Dollar Index (dx00y) 101.36 0.5%, it would be my view that foreign dollars are being converted back into U.S. assets, while selling in Treasuries give indication that money flows are being directed into either corporate bonds or being slated for equities.

New agencies have been reporting in the past 30-minutes that 14 Iraqi troops have surrendered. News reports may be suspect at this time after this morning news that coalition forces had approached the Iraq border were not confirmed by U.S. government officials, thought British press and reported such action.

Individual volume leaders at this hour are Oracle (ORCL) $11.19 –8.57%, Boots&Coots (AMEX:WEL) $2.05 +7.89%, Cisco Systems (NASDAQ:CSCO) $14.27 –0.49%, Microsoft (NASDAQ:MSFT) $26.01 –0.11% and Intel (NASDAQ:INTC) $17.95 –1.64%.

Jeff Bailey

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