By Clyde Noel
Town Crier Correspondent
Stock Report
The market is in oversold territory, corporate earnings continue to be down and the worst is not over.
June has not been a good month for the stock market because earnings reported this month have been mostly negative. Among the earnings reports, 34 percent of the warnings have come from the tech sector, particularly the semiconductor area.
The market will continue to be unstable for the next three to four months because the economy is trying to find a bottom.
The Dow Jones industrial average ended Friday at 10,623, down 353 points for the week. Most of the Dow’s weekly loss came after profit warnings and economic reports drove down the average.
The Nasdaq composite index slipped to 2083 and finished the week down 186 points.
The Town Crier index fell 115 points for a 9.93 percent loss when more than 75 percent of the 50 stocks in the index were down. Money-wise the index lost $5,000 on its $50,000 investment.
Leading the Town Crier losses were: Agilent, down 13 percent; BEA Systems, down 18.69 percent; Cisco, down 18.74 percent; Flextronics, down 20.32 percent, Harmonic, down 31.98 percent; Legato, down 13.03 percent; Network Appliance, down 21..22 percent; Silicon Graphics, down 24.36 percent; Varian Semiconductor, down 13-56 percent and Yahoo, down 13.69 percent.
The Federal Reserve is expected to slash interest rates by another half a percentage point at its next meeting June 26-27. The Fed, which has lowered rates five times this year was expected to cut the interest rate a quarter of a point, but with negative economy reports from the government, it is expected to make the cut a one-half percentage point to feed the economy.
Aside from that larger than expected rate cut, investors have no reason to buy stocks. Especially in the technical sector. Cisco Systems, will issue its quarterly earnings this month and analysts fear the results. Friday the stock declined $1.09, finishing at $16.65. Reviewing analyst downgrades, Cisco is not a stock to buy at this time. But those who already own it should hold on to it for now.
These pre-announcements are pushing down the market, and the warnings seem to be overwhelming. Because of the pre-announcements, we haven’t seen the light at the end of the tunnel.
We will have bad numbers for the next couple of weeks. Historically, the summer doldrums are not good for the market. Analysts are looking for a fourth-quarter recovery, and if that doesn’t happen, those involved in the market need to be optimistic and hope for a good 2002.
We have to get through another two or three bad quarters before a market upturn; the present second quarter is terrible. If your looking at your portfolio, stick with quality names and stay diversified.
