Stocks Tick Up Slightly
www.businessweek.com JANUARY 13, 2003 02:22 PM MARKET SNAPSHOT
Corporate news took centerstage and put a damper on stocks. In the spotlight: AOL chairman Steve Case resigns
Stocks edged modestly higher around 2 p.m. Monday afternoon as investors weighed doubts about fourth-quarter earnings and digested news from AOL Time Warner (AOL ) that Chairman Steve Case will resign in May.
The major indexes hve moved in a narrow range since noon. The Dow Jones industrial average gained 31.74 points, or 0.36%, to 8,816.63. The broader Standard and Poor's 500-stock index ticked up 1.75 points to 929.32. And the Nasdaq composite index added 2.46 points, or 0.17%, to 1,450.18. Last week, the Dow gained 1.5%, while the tech-laden Nasdaq jumped 3.5%.
Topping company headlines, AOL says its much-maligned chairman Steve Case, the architect of the company's acquisition of Time Warner in 2001, will step down in May. Now all the chief architects of the deal are gone, with former Time Warner top exec Richard Parsons now running the show as CEO and soon-to-be chairman.
Meanwhile, defense giant Raytheon (RTN ), sanctioned in November for alleged violation of disclosure rules, said the U.S. Securities and Exchange Commission has begun a separate accounting investigation into the company's business that makes Beech Jet and King Air commercial aircraft.
Dell Computer (DELL ) lost ground after J.P. Morgan downgraded the stock to neutral from overweight.
Fourth-quarter earnings season picks up speed this week. Troubled hospital chain Tenet Healthcare (THC ) shares rose after the company reported fiscal second-quarter earnings Monday of 72 cents per share, vs. 56 cents a year ago. Revenue rose 11.3%. Looking ahead, S&P says Tenet's EPS comparions should turn negative on the adoption of a new Medicare "outlier" payment policy as of Jan. 1. Tenet has been criticized, and is under investigation, for the way it used Medicare reimbursements to boost revenue.
Duke Energy (DUK ) shares skidded after the utility company said 2002 ongoing EPS fell about 10 cents below the previously indicated range of $1.95 to $2.05, due to weakness in the economy and power prices and trading. Merrill Lynch downgraded the stock to sell from neutral.
Tech outfits Intel (INTC ) and Teradyne (TER ) will report quarterly results Tuesday, while Yahoo! (YHOO ) and Apple Computer (AAPL ) are due Wednesday.
On Thursday, IBM (IBM ), Microsoft (MSFT ), Sun Microsystems (SUNW ), General Motors (GM), and eBay (EBAY ) all report results. Conglomerate General Electric (GE ) will release fourth-quarter profits on Friday.
This week, global tensions will continue to weigh on the markets. North Korea said Friday it will withdraw from a global treaty to prevent the spread of atomic weapons, but added it would not develop nuclear weapons. The U.S. condemned the country's decision to quit the treaty but is "willing to talk" to North Korea, Special Envoy James Kelly says.
The prospect of war with Iraq dimmed somewhat Friday as U.N. arms inspectors criticized Iraq's lack of cooperation but added that they found no "smoking guns" to indicate that programs to produce weapons of mass destruction were restarted. However, the U.S. military continues to build up forces in the region.
In the meantime, the oil workers' strike in Venezuela is creating a dire economic situation for the country as opposition labor leaders step up pressure on President Hugo Chavez to step down. Now many workers from other areas of the economy are walking off the job, according to wire-service reports.
In Vienna, OPEC ministers voted to boost production of oil by 1.5 billion barrels per day to try to keep the price from rising above its target of $28 per barrel. Crude oil prices rose to nearly $32 per barrel on Monday.
Treasury Market U.S. Treasury prices were mostly higher in price Monday as equities weakened. Traders were also keeping an eye on the supply situation as corporations announce offerings.
World Markets European stocks were mixed. In London, the FTSE index finished down 25.80 points, or 0.65%, to 3,948.30. In company news, J Sainsbury Plc, Britain's second-largest supermarket chain, plans to make a hostile 4.4 billion-pound ($7 billion) offer for Safeway Plc to thwart a bid from smaller rival William Morrison Supermarkets Plc. Paris' CAC-40 index added 9.69 points, or 0.31%, to 3,169.82. In Frankfurt, the DAX index climbed 28.93 points, or 0.95%, to 3,066.26, following a report that German industrial production rose a surprising 2.5% in December, the largest increase in two years.
In Asia, stocks finished higher. Hong Kong's benchmark Hang Seng added 112.58 points, or 0.48%, to 9,721.50. Japanese markets were closed for a holiday. On Friday, the Nikkei 225 index closed at 8,470.45.
Today's Headlines About 7,000 Marines from Camp Lejeune and a number of fighter pilots from Seymour Johnson Air Force Base will leave for the Persian Gulf region over the next few days as tension with Iraq continues to grow, officials said: AP.
North Korea withdrew from a global treaty that bars it from making nuclear weapons, but said it was willing to talk to Washington to end an escalating dispute over its nuclear ambitions: AP.
The Bush administration plans an initiative to form a group of nations to help end a strike in Venezuela that has crippled oil exports from the major oil supplier to the United States: Washington Post.