Market Insider: Techs Catch the Big Fish
Technology has been a big lure in an otherwise fishy stock market this week.
Just look at the tech happy Nasdaq, up 1% Wednesday. But the Dow closed down 20 points, after first trading sharply higher, and then sharply lower in a 240-point swing. Tech stocks bounced up as some big earnings -- Yahoo and Intel -- beat the street.
Selective tech plays could be the order of the day again Thursday as the tug-of-war between housing-inspired gloom and earnings winners continues. Ebay reported better-than-expected earnings and a rosy outlook, immediately propelling its stock higher after-hours Wednesday but it reversed on worries about margins.
Google will be the big tech highlight Thursday when it releases earnings after the closing bell. Advanced Micro Devices also reports.
Some bullish news for tech came in a late day report on worldwide personal computer shipments. Third quarter pc shipments rose 15.5%, stronger than expected. Hewlett-Packard had the lead market share at 19.6% and showed big gains. Dell was second with 15.2% share, but it had sluggish growth.
No surprise techs were the best performers in Wednesday's market. The S&P information technology sector closed 1.5% higher. The worst were energy stocks, down half a percent. Tech has also been the best performer for the month, up 3.6%, followed by energy, up 3.2%.
"Certainly, it's been a very choppy tape," said Bill Nichols, senior managing director of equities trading at Bear Stearns. "Certainly, a lot of volatility in the energy tape. You had a wild ride in crude oil. You can see a lot of volatility without breaking any trend."
Crude oil fell $0.21 per barrel to $87.40 but not before racing to a new record of $89 per barrel. Turkey's parliament Wednesday voted to attack Kurdish rebel bases in Northern Iraq, a situation the oil market has been watching closely.
A senior U.S. intelligence official told NBC News that no one is "too spun up" about the Turkish parliament vote, that it is seen as more domestic politics than anything else. The official did not rule out small-scale operations, as has happened in the past, but discounted any larger scale operations by the troops massed on the border.
Thursday will be another big day of earnings. Bank of America reports before the bell, along with a bunch of other major companies including Pfizer , Eli Lilly , Wyeth , Southwest Airlines , and Union Pacific .
Data to watch Thursday includes weekly jobless claims, leading indicators at 10 a.m. New York time, and the noon release of the Philadelphia Fed's Survey, sometimes a market moving number. Traders will watch that closely after the Fed's beige book Wednesday showed signs of increasing economic weakness.
The chatter ahead of the weekend's G-7 meeting is building. Traders are looking for some dollar-related comments, and there will no doubt be much focus on recent market turbulence. I hear talk that Sovereign funds will be on the agenda at the group's Friday night dinner. CNBC's senior economic correspondent Steve Liesman will be covering the G-7 from Washington Friday.
Interesting comments came from the Fed's William Dudley late Wednesday. He said the turmoil in financial markets is "far from over" though things have improved. He also says the core of the banking system is well capitalized. Dudley is in charge of overseeing financial markets at the New York Fed. He said expected losses on subprime mortgages are still within the Fed's expected range of $100 billion to $200 billion.
Washington Mutual earnings fell 72% to $210 million. Washington Mutual, hurt by mortgage losses, said it sees no end in sight to the U.S. housing slump. WaMu CEO Kerry Killinger said the thrift is not making any forecasts for when the market might stabilize. "At this point, we have not seen signs of stabilization. We are planning for challenging conditions in the housing market for some time." Ouch.
WaMu joins the list of financials getting hurt by the housing slump and the subprime mortgage tsunami.
Citi vs JP
After watching JPMorgan's better-than-expected earnings report drive up JPMorgan's stock, it wasn't surprising that Wall Street's rumor mill started to churn with new rumors that Citigroup CEO Chuck Prince is out the door. Citi's less-than-stellar earnings report has taken its toll on Citi stock so the Prince rumor got the shares popping midmorning. That was until CNBC's Charlie Gasparino was told by Citigroup that the rumor was not true. Citi also denied a parallel rumor that the bank's board was convening an emergency meeting and plotting to add more management power to the executive suite. No surprise, JPMorgan closed higher and Citi stock closed lower.
Meanwhile, the Securities and Exchange Commission has targeted Countrywide Financial CEO Angelo Mozilo's stock sales in an informal investigation, says the Wall Street Journal. CNBC's Maria Bartiromo reminds us that Mozilo in an Aug. 23 interview told her he has been selling the stock because a majority of his net worth is tied up in it and he needs to plan for his future. Mozilo sold at least $130.6 million in Countrywide stock in the first half of the year.
"I try to do it in an orderly way. So I did it...where I don't have control over it," Mozilo said in August. "...we draw the contract, whatever the price is. It sells on a day that I don't even know... It's just--and that's what's done, out of my hands, I never have any contact with anybody. That was the best way that I thought I could sell without people thinking I know something, I'm doing something, because I only--I can only set them up when I know nothing. And so it just keeps on going along. That to me is the best interest to me and the shareholders."
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