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WJR October 2001 reports

October 31, 2001

According to the Conference Board, Consumer Confidence fell like a cluster bomb in October. The dive to 85 was ten points more than expected, and the worst reading in 7 years. And if you liked that news, you'll love what's coming today. The first estimate of third quarter Gross Domestic Product will be released in eight minutes. Expect a decline of 1 percent or more, due in large part to a slowdown in consumer spending. That would be the worst drop since 1991.

The news isn't getting any better on the jobs front. In France, Alcatel will shed 10,000 workers. In the U.S., Fidelity Investments will let 2% of its workforce go. CVS will shut 200 stores and layoff 300 employees.

Abode Systems warned about 4th quarter and next year's earnings last night. Abode Stock is down over 19% in pre-market trading.

Tokyo was down for the fourth session in a row. European markets are mixed. S&P and Dow futures have been hovering near fair value all morning. Nasdaq futures are 15 points above fair value, but the GDP number at 8:30 could shake things up quite a bit.

October 30, 2001

The big local story, of course the executive shake-up at Ford Motor. This is a story that's been pretty much anticipated by the market. Ford stock is not showing much movement in pre-market trading. Yesterday Ford lost about 2.7% and GM, on the news of the Hughes Electronics deal, lost almost 6%.

Yesterday's market action surprised a lot of people who had gotten the impression that late afternoon rallies were suddenly a birthright of U.S. investors. The 3 to 4 per cent drop off we suffered carried over to foreign markets, as Asia dropped about 1 per cent. Europe is down about 1.5 to 2.5% so far this morning.

At 10 o'clock, the October Consumer Confidence number will be released by the Conference Board. Last week we had a surprise uptick in the September University of Michigan Consumer Sentiment Index, this report will be watched closely to see how the consumer is coping. Procter & Gamble beat estimates by 2 cents this morning, Verizon is lowering 4th quarter and annual estimates slightly, due to the September 11th attacks.

Looks like we may have another mess on our hands at 9:30. Adjusted for fair value, S&P futures are down 11, Dow futures are down 91 and the Nasdaq futures are 23 points below fair value.

October 29, 2001

A moderately big surprise over the weekend. Echostar is the apparent winner in the bidding for GM Hughes Electronics, even though over 20% of the financing for the deal is still not exactly nailed down. The deal values Hughes at a 20% premium to Friday's closing price. The final chapter to this book will be written by the regulators. It's far from certain that this deal, which would produce a near monopoly in satellite broadcasting, will be approved.

Lockheed Martin is another winner in pre-market trading, up about 7% after winning the Pentagon's Joint Strike Fighter contract last Friday.

Oil prices moved up about 2% this morning. OPEC will be meeting later today, and will presumably cut output to try to get prices up to about $25 bucks per barrel. Oil prices have declined by 25% since mid-September.

Tokyo was down overnight. European markets are down 1 to 2 percent at this hour. Futures have improved but they're still pretty weak. Adjusted for fair value, S&P futures are down 8, Dow futures are down 67 and the Nasdaq futures are 13 points below fair value.

October 26, 2001

We went from a triple digit loss to a triple digit gain yesterday as another late day rally drove the market. Some people have pointed to the passage of the anti-terrorism bill as the reason for the rally. That may or may not have had an impact. The more important thing to note is that we have had a series of these late day rallies. It's the sign of a market that wants to go up - there appear to be more buyers than sellers in spite of all the lousy earnings news and potential terrorism threats.

Two big economic numbers will be released at 10 o'clock this morning, when we get the September new home sales data and the University of Michigan Consumer Sentiment Index. New home building drives appliance sales, furniture sales, and lots of other business activity. It's expected that new home sales slipped in September, the question is the degree of the slippage. The estimated decline is 4%. The U of M number is also expected to slip a bit. Again, it will be a matter of degree, not direction that will be important.

Amgen beat estimates last night, JDS Uniphase lost more money than expected.

Adjusted for fair value, our futures are slightly negative, but no really clear indication for the market open just yet.

October 25, 2001

Today is what Microsoft hopes will be the first day of the next great personal computer upgrade cycle. Microsoft's new operating system, Windows XP is officially released today. XP is really a consumer-oriented upgrade to the Windows system. A recent survey indicated that only 16% of businesses contacted expected to upgrade to XP. So, the jury's out on how big this will be, but with PC prices continuing to drop, this may be the excuse a lot of consumers and small businesses need to upgrade their systems.

Dow Chemical met estimates, but lowered guidance for next quarter. EDS beat estimates and confirmed their outlook for 2002, so some good news from EDS. Chiron also beat estimates last night.

This morning the European Central Bank again left interest rates unchanged, once again making believe that all things economic are just fine, and that all we have to worry about is inflation. Tokyo briefly rose through the 11,000 level overnight for the first time since August.

Our futures are weaker this morning. Adjusted for fair value, S&P futures are down 5½ , Dow futures are down about 44 points and the Nasdaq futures are 29 points below fair value.

October 24, 2001

The FTC is at it again. Acting on behalf of sailors everywhere, the FTC has blocked the purchase of Seagrams's liquor business on the grounds that the merger would result in only two producers of rum sold in the United States. So, rather than risking inflation in the prices of tropical drinks, the FTC is blocking that sale.

Most of the earnings reports continue to match estimates, but the outlook for the rest of the year and next, to the extent companies are willing to hazard a guess, isn't all that great. Compaq missed their number by a penny, and lowered expectations for the next couple of quarters. AT&T matched estimates, but said that revenue from consumer long distance will fall 25 to 30% next year. Kodak met lowered estimates, and will cut 4,000 more jobs.

There was another rumor floating around in Europe that Osama bin Laden had been captured. There's no confirmation of that - it's just a rumor, but it did drive European stock prices up this morning.

Our futures are up this morning on the heels of the European performance. Adjusted for fair value, S&P futures are up almost 7, Dow futures are up about 43 points and the Nasdaq futures are 13 points above fair value.

October 23, 2001

The futures took a pop up as we talked yesterday morning, and the market just kept marching forward the rest of the day. The Nasdaq, with its 37 point gain is now above where it stood before September 11th.

A lot of companies announcing earnings this morning, as we hit the peak of earnings season. Daimler Chrysler saying that they had a good third quarter and will report full year earnings in line, but at the lower end of the range of estimates, Johnson Controls beat estimates this morning by 3 cents. Lear beat estimates by 2 cents per share.

In fact, the vast majority of companies this morning meeting or beating estimates. A couple exceptions, ExxonMobil missed by 2 cents, Lucent Technologies lost almost 9 billion dollars, that's 4 cents a share more than expected, although they say they'll break even by next year. After the market closes today,, Compaq and AT&T will report.

Asia was mainly up overnight, and outside of Russia and Poland, all European markets are gaining ground today. Adjusted for fair value, S&P futures are up about 8, Dow futures are up about 40 points and the Nasdaq futures are up 14 points above fair value.

October 22, 2001

Earnings and anthrax will be driving stock prices again this week, and we'll have plenty of earnings to consider. About a third of the S&P 500 report this week. Conoco beat estimates by 7 cents this morning. Lexmark met estimates this morning but warned about the next quarter and will be cutting 12% of its workforce. SBC missed estimates by a penny and will be cutting several thousand jobs.

So far, the actual earnings reported have been running better than analysts were led to expect, but the number of companies warning about their fourth quarter numbers is running far higher than normal. Of course, some of that is gamesmanship, so that the estimated number can eventually be beaten, but it's not likely that many companies are seeing a strong uptick in business just yet.

At 10 o'clock we'll get an economic number that could look a little scary. The September Index of Leading Economic Indicators, which had seen some improvement through the summer, will probably be down by a half percent or more.

No clear direction in the overseas markets overnight. So far our futures are fairly weak. Adjusted for fair value, S&P are down 4, Dow futures are down 22 although the Nasdaq futures are only down about 3 points.

October 19, 2001

We could really use a day of news stories that don't include the word "anthrax." But we may just have to hope for a Consumer Price Index report that doesn't include the word "inflation." A big factor in everybody's thinking about next year is the hope that interest rates stay low and that government stimulus kicks in. That could leave the door open to a pick up in inflation. So, while no one is expecting a nasty number for September's CPI, anything over two tenths of a percent would not be good news. That report will be out in ten minutes.

Big bunches of earnings came out yesterday. So far, over 200 of the S&P 500 have reported, and on the whole, the number of companies missing their estimates are a lot lower than average. Of course, lowered expectations plays a big part in that. SPX missed estimates by a nickel. Visteon lost 8 cents more than analysts expected.

This morning Nokia reported in line with earnings, but their profit margins were better than expected.

Once again, most European markets are down about 2%. And so far our futures aren't looking all that good. Adjusted for fair value, S&P are down 3, Dow futures are down 30 and Nasdaq futures are 9 points below fair value.

October 18, 2001

We started with a nice rally yesterday, but the anthrax reports from Washington and New York infected the market, and for the first time in a while, there was no afternoon rally to bring the market back. Technology stocks had the biggest turnaround, with the Nasdaq losing over 4%. The earnings reports that had been surprisingly positive until yesterday also turned sour. Texas Instuments beat lowered estimates by a penny, losing 3 cents per share, but predicted 10 to 15% decline in revenue next quarter. Siebel Systems missed their number for the first time ever, missing already lowered estimates by 2 cents a share. A lot of Siebel's orders close in the last few weeks of the quarter, and obviously, September 11th didn't help them a whole lot.

General Motors checked in this morning with profits of 85 cents per share, that's down from $1.55 last year, but a nickel more than analysts expected. Lots more earnings coming today, including Microsoft, Boeing, Nortel.

Most European markets are down about 2% this morning. Adjusted for fair value, S&P are up 2, Dow futures are up over 20 and Nasdaq futures are 4 points above fair value.

October 17, 2001

A lot of companies warned about this quarter's earnings. One company that did not warn was IBM. Last night IBM was a little light on revenue, but they beat earnings estimates and affirmed their guidance for the fourth quarter. IBM up about 4% in pre-market trading. Intel matched earnings estimates although revenue was down 25% from last year, Kraft Foods, the top North American food producer reported profits up 24%. That's a penny ahead of estimates. AOL Time Warner beat estimates by 4 cents per share. Citigroup met estimates and Pfizer beat estimates by a penny.

As expected, Ford Motor lost 28 cents, that compares with a 50 cent profit in the same quarter last year. Dana matched lowered expectations with a loss of a nickel per share, but they are cutting 15% of their workforce and cutting their dividend to a penny from 31 cents. There's also a report that Merrill Lynch may cut 10,000 jobs, that's also 15% of their workforce.

A good rally shaping up at the open, especially in tech and telecom stocks. Adjusted for fair value, S&P futures are up about 10, Nasdaq futures are up about 31, and the Dow is looking to open up about 80 points.

October 16, 2001

Another late afternoon rally pulled us even yesterday, and it looks like we may get some early follow through this morning.

Big-time earnings numbers roll out today. After the regular market closes today, Intel and IBM both report earnings. Both are expecting a modest decline in profits from the same quarter last year. Caterpillar and Johnson & Johnson also reporting today. Unisys beat estimates by 2 cents, but warned that the fourth quarter will be far lower than estimates. United Technologies met estimates, they're cutting 5,000 jobs. Fifth Third Bank beat by a penny. Delphi met estimates of a nickel a share, but that's down from 26 cents last year.

GM and Ford both had their credit ratings cut by Standard & Poors yesterday.

Most Asian markets rose overnight. European markets are up 1 ½ to 2 percent, and our futures have been mainly on the rise since the European markets opened, although they've leveled off in the past hour.

Adjusted for fair value, S&P futures are up about 3, Nasdaq futures are up about 22, and the Dow is looking to open up about 30 points.

October 15, 2001

The anthrax scare on Friday knocked the stock market around a bit. However, once again, a late day rally cut a lot of the loss by the close of trading.

We may need one of those late day rallies again today. Asian and European markets are off 1 to 2 %, a big earnings warning from the Dutch firm ING, and Bethlehem Steel will reportedly file for bankruptcy protection today.

Half of the Dow Jones 30 Industrials report earnings this week, and about 40% of the S&P 500 also fess up. Presumably, the flood of earnings warnings we've already had will take the sting out of those third quarter numbers. Projections for the rest of the year will really be the focus of attention. Global Marine and Fannie Mae beat estimates by a penny this morning. Eaton beat estimates by 3 cents, and did not warn for the fourth quarter. Later today, Oracle holds its annual meeting.

A report on August business inventories comes out in 10 minutes, no matter what that report says, we're likely to head lower at 9:30. Adjusted for fair value, S&P futures are down about 9, Dow futures are down about 71, and the Nasdaq futures are almost 25 below fair value.

October 12, 2001

Okay, it's time to take a deep breath. We'll never be able to go back to life way it was before September 11. But your stocks have. The S&P 500, the Nasdaq and the Wilshire 5000 open this morning higher than they closed September 10. So - if you're one of those people whose investment allocation was inappropriate on September 11, your portfolio has been given a Mulligan. Sit down over the weekend and do some planning for the future.

More decent earnings news yesterday. General Electric met estimates. Juniper Networks made 10 cents a share versus a 7 cent estimate, and they gave us some hope that this quarter is going along well. Juniper stock was up almost 45% in after-hours trading. A&P reported a smaller than expected loss. Compaq got a big contract with the U.S. Postal Service.

In ten minutes we get the September Producer Price Index. Expect an increase of one tenth of a percent or less.

The futures are mixed this morning. Adjusted for fair value, S&P futures are up about 3, Dow futures are down about 7, but the Nasdaq futures are almost 14 above fair value.

October 11, 2001

Well it's been a month since the terrorist attacks. If you held the S&P 500 stocks on September 10 and did nothing but hold them during the past month, how much would your investments have lost? One percent. And oh, by the way, we went up two percent yesterday alone. So the mistake was not being invested in stocks September 10th, the mistake would have been selling September 20th.

If you've been living on your dividends from Ford Motor stock, you may want to pass on that second donut this morning. In a move that many people expected, Ford's board has cut the dividend in half. That'll save about a billion bucks a year.

The earnings parade continues today, and quite frankly, the reports we've gotten so far aren't as dire as many expected. Accenture and Costco beat estimates by a penny. Yahoo made a penny for the third quarter in a row. That met expectations. Later today, General Electric, Dow Jones and Juniper Networks will report.

No interest rate cut from the European Central Bank this morning. Adjusted for fair value, S&P futures are up 3, Nasdaq futures are up 17, and it looks like the Dow could rally 30 points or so at the market open.

October 10, 2001

We seem to have a market that is really looking for some good news. Motorola's earnings report last night wasn't exactly anything to write home about - a loss of 7 cents per share, a special charge of 2 billion dollars, expected losses of 5 to 8 cents per share in the current quarter. Yet, Motorola is trading up in the premarket, evidently because it said that its telephone handset business has returned to profitability.

We have had a few companies beat estimates overnight. Lam Research, Harley Davidson and SunTrust Bank have all beaten expectations. Good news for American Express yesterday, as a court has ruled that Visa and Mastercard member banks can't be denied the opportunity to offer other credit cards, like American Express or Discover.

Bad news for Microsoft, though. News has leaked out of a potential fine from the European Union Commission. It's not a done deal, but the Commission could fine Microsoft up to 2 ½ billion dollars for allegedly anti-competitive practices.

Oil stocks up in Europe, on the possibility of a cut in production out of OPEC. Just like yesterday, our futures are all within a few points of fair value. Not much direction for the market open at this point.

October 9, 2001

More layoffs on Wall Street this morning. Credit Suisse First Boston is going to cut a billion dollars in costs, eliminating 2,000 jobs in the process. That, unfortunately will not be the last of those types of announcements.

Earnings season shifts into second gear today. After the market closes we'll get the quarterly reports from Motorola and Harley-Davidson. Lam Research and Pepsi Bottling also reporting in today.

Yesterday was obviously a nervous day for the market. Some excitement in technology stocks, especially semiconductor stocks, helped hold the major averages pretty much in place. Advanced Micro Devices in unveiling a new chip today. The new Athlon XP chip will run at over 1 ½ gigahertz and compete with Intel's Pentium 4.

Almost every European market is up slightly this morning. Kind of a so-so outlook from the futures this morning. S&P, Dow and Nasdaq futures are all within 5 points of fair value.

October 8, 2001

Well, here we go. The military action that started yesterday in Afghanistan will certainly overshadow things like earnings reports and economic data this week - although there will be a steady stream of reports rolling out, starting tomorrow.

The last time the bombs flew, back in 1990 at the outset of Operation Desert Storm, the stock market took off like a rocket. Of course, this time around, concerns about further terrorist attacks on U.S. soil are likely to keep a lid on investor enthusiasm.

The bond market is closed today for Columbus day, but stocks will trade. Overseas, Japanese markets were closed overnight. All other major stock markets are down. Hong Kong lost 3%, Indonesia lost 4%. Most European markets are down 1 to 2 %, which isn't all bad, given the circumstances.

We will head south at the 9:30 this morning. Adjusted for fair value, S&P futures are down 10, the Dow futures are down 122, but the Nasdaq futures are only 22 points below fair value.

October 4, 2001

A surprisingly strong rally was led by technology stocks yesterday afternoon. Cisco Systems set off the rally, reaffirming analyst estimates that they'll make 2 cents per share in the first quarter. Now, that's not exactly blockbuster performance, but it was enough to send the Nasdaq up about 6%.

The other big story driving the market yesterday was word that the economic stimulus package coming out of Washington might be as much as 75 billion dollars. The Bank of England cut interest rates a quarter percent this morning.

The parade of earnings warnings continues this morning. Corning warned again last night. They'll take a billion dollar writeoff, cut 4,000 jobs and idle two plants in November and December. Knight Trading and Global Crossing also warning this morning. Strangely enough, Mariott met their estimate for the quarter, although they warned that the fourth quarter profit will be roughly half what analysts expected.

Asia and Europe both up nicely overnight. We should get off to a good start today. Adjusted for fair value, S&P futures are up 6 ½ , Dow futures up 32 and the Nasdaq futures are 21 points above fair value.

October 3, 2001

As expected, Mr. Greenspan and Company lowered the federal funds rate to 2 ½ percent yesterday and the market - well, seemed to have a mind of its own. We went down for about a half hour after the announcement, and then rallied for a pretty nice gain on the day. That gain may go away in short order this morning.

Nortel Networks, the Canadian company that was a shining star a couple years ago, but a black hole ever since warned again about future revenue, future earnings and future jobs. They'll cut 20,000 more jobs - that's 30% of their remaining workforce.

Pharmaceutical companies have been by and large a safe haven during the past couple of years. But word out of Eli Lilly is less than positive this morning. Lilly says they will miss next quarter and next year's estimates. Evidently, generic Prozac sales are really putting a crimp in sales of the full-priced version.

Futures were weak this morning, but they've really dropped off since the Greyhound bus story broke. Adjusted for fair value, the S&P futures are down 11, Dow futures are down 102, but the Nasdaq futures are 18 points below fair value.

October 2, 2001

Remember President Kennedy? The last time the fed funds rate was 2 ½ percent, Jack Kennedy was President. Betting is that at 2:15 this afternoon, we'll be back at 2 ½ percent, as the Federal Reserve Open Market Committee will cut rates for the ninth time this year. We should see even the highest yielding money markets paying well under 3 % in short order.

It looks like this whole idea of taking advice from a cow isn', , , , ,, , t working out so well, . A m, ajor, broker, age firm today lowered its outlook for computer ma,, , ker Gateway, predicting a loss of the quarter. Compaq Computer also issued a warning yesterday. They'll lose a nickel or so this quarter - analysts were expecting a profit.

If you're holding a ticket to ride on SwissAir, you may now refer to yourself as a "non-secured creditor". SwissAir has filed for creditor protection, jet fuel shipments to SwissAir have been cut off and some of their planes have been impounded.

Futures are not promising this morning, but they have improved in the last hour. Adjusted for fair value, the S&P futures are down 3, Dow futures are down 40, but the Nasdaq futures are only about 7 points below fair value.

October 1, 2001

Well, it's October. Not exactly a month that people associate with great stock market performance. But, if it's any consolation, October has historically been about average compared with other months. The worst month for stocks? That would be September.

Last week the Dow actually rose almost 7 ½ percent, its best week i, n about 17 years. The Nasdaq was up over 5%. However, a lot of that m, ay have resulted from money managers rebalancing portfolios - buying stocks to readjust portfolio allocations in light of the stock swoon the week before.

Federal Mogul filed for Chapter 11 bankruptcy protection this morning, a result of asbestos liability claims. That stock closed Friday at 65 cents per share.

Casino owner Mirage warning about earnings this morning, one of many warnings to come in the next couple weeks. One business has evidently not been hurt by the events of September 11th. Krispy Kreme this morning reaffirme, d their third and fourth quarter estimates, so even as the economy contracts, the waistline expands.

It could be a sloppy start at 9:30. Adjusted for fair value, the S&P futures are down 6, Dow futures are down 95, but the Nasdaq futures are only about 13 points below fair value.
WJR November 2001 reports
WJR September 2001 reports

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