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Draining week for Wall St.
By Parija Bhatnagar
NEW YORK (CNN/Money) -- U.S. stocks spiraled lower for the fourth straight week Friday after a succession of earnings warnings from tech and blue-chip heavy-hitters further eroded investor confidence in a profit recovery and held the Dow below 8,000. But the major indexes narrowly pulled off a positive close for the day in a wobbly session on heavy volume typical of a "triple witching" day. The Dow Jones industrial average rose 43.63 to 7,986.02, within sight of its July 23 low of 7,702.33. The Nasdaq composite gained 4.64 to 1,221.09. The Standard & Poor's 500 index added 2.07 to end the day at 845.39. "Even though the news has been dismal this week, investors have to keep an eye on the July Lows," Ken Tower, chief market strategist with CyberTrader told CNNfn's Street Sweep. "As long as the Dow and the S&P stay above those lows, you have to be ready for some good news. If you take those lows out, the market will sink lower." The July 23 low for the S&P was 797.70. For the week, the Dow lost about 4 percent, while the Nasdaq dropped 5.5 percent. The Standard & Poor's 500 lost 5 percent. Market breadth was narrowly positive in volume exaggerated by the triple witching. On the New York Stock Exchange, advancers beat decliners as 1.7 billion shares traded. On the Nasdaq, winners topped losers as 1.6 billion shares changed hands. A triple witching occurs when contracts for stock index futures, stock index options and stock options all expire on the same day. That often leads to market volatility and exaggerated volume -- a perfect description of Friday's trading. Tech cheerA positive sales forecast from Qualcomm, however, helped spread some cheer for technology issues. But brokerage downgrades for blue-chip stocks Eastman Kodak and Philip Morris were negative factors on the Dow. "This [is] a very unpredictable day, with a lot of moves and volatility," said Al Goldman, director of technical market analysis, with A.G. Edwards. "September is the cruelest month for stocks. We've had disappointing earnings pre-announcements. The economy over the last few months has slowed down, and there's the Iraq situation too." "Crank that into a market and it will drag lower than whale droppings at the bottom of the deep blue sea," Goldman said. Warnings earlier from No. 1 restaurant chain McDonald's (MCD: up $0.10 to $17.95) and financial services firm J.P. Morgan (JPM: up $0.31 to $20.18), combined with a whopping bombshell from tech component EDS (EDS: up $0.59 to $17.79) that also deflated rival IBM (IBM: down $0.88 to $63.92), made it a dismal trading week for investors. Disappointing economic reports on manufacturing activity, jobs and housing construction also raised the specter of concern about a crippled economic recovery. "Investors appear to be giving up. The thinking is that there's no real reason to buy stocks until the economy gets better," said Jim Glickenhaus, portfolio manager with Glickenhaus & Co. "People have got destroyed in the market. Investors have lost more money than they believed they would and they want to get out. So every time large groups want to get out of the market, that will counter the market's attempts to rally." Calling for QualcommSome upbeat news from Qualcomm blew the dust off beaten-down tech stocks. The wireless technology firm late Thursday raised its chip shipment estimates for its fourth quarter, citing strong demand, particularly for its advanced phone chips. But Qualcomm (QCOM)'s news elicited a mixed response from the analyst community. A.G. Edwards upgraded the stock to "buy" from "hold," while Banc of America Securities raised its estimates for Qualcomm's September quarter and its 2003 estimates. But CIBC World Markets tempered its reaction to the news, saying it's "extremely skeptical" about 2002 forecasts. Shares of sector mates Ericsson (ERICY: up $0.02 to $0.52), Nokia (NOK: up $0.42 to $12.84) and Nextel Communications (NXTL: up $0.44 to $7.44) also enjoyed swings to the upside. It wasn't completely smooth sailing for the semiconductors. Salomon Smith Barney downgraded chipmaker Texas Instruments (TXN: down $1.25 to $15.78) to "in line" from "outperform" and cut its 2003 and 2004 estimates, citing a slowing unit growth for semiconductors in the coming quarters and weak demand in the personal computer segment. The firm slashed its price target on the stock to $15 from $30. Prudential Financial cut its first-quarter and fiscal 2003 estimates for Sun Microsystems (SUNW: up $0.18 to $2.88), saying it believes the No. 1 maker of Unix servers to "is experiencing a "lower-water level" across the board as a result of weak information technology spending, particularly in Europe. Dow not picture-perfectTwo blue-chip components blurred the picture for the Dow. Bear Stearns downgraded photographic products maker Eastman Kodak (EK: down $1.29 to $26.63) to "underperform" from "peer perform," saying it was disappointed that the investors' meeting Thursday discussed no immediate breakout in earnings and little in the way of growth prospects as long as the domestic economy continues to struggle. Cigarette maker Philip Morris (MO: down $2.01 to $42.69) also put the brakes on the blue-chip index after Morgan Stanley cuts its 2002 and 2003 estimates, saying it believes the company likely will fall short of its 9-to-11 percent full-year earnings-per-share growth target as it is also forced to increase its U.S. promotional spending. But Boeing (BA: up $0.96 to $36.48) appeared unfazed by negative action from Merrill Lynch. The brokerage slashed its price target on the aerospace firm to $50 from $55 a share and also trimmed estimates for 2003 through 2006, citing lower aircraft deliveries and income from its financial services arm Boeing Capital. European markets ended mixed, while Asian-Pacific stocks finished lower Friday, with Tokyo's Nikkei index down 2 percent on weakness in Japanese bank issues. Treasury prices were mixed, with the 10-year note yield at 3.78 percent. The dollar rallied versus the yen and was also stronger versus the euro. Light crude oil futures gained 10 cents to $29.78 a barrel in New York, where gold edged lower.
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