Techs Lead the Way Down

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Includes: DIA, QQQ, SPY
by: Midnight Trader

4:25 PM, Jun 24, 2011 --

  • NYSE down 79.36 (-1%) to 7,974.72
  • DJIA down 115.42 (-1%) to 11,934.58
  • S&P 500 down 15.05 (-1.2%) to 1,268.45
  • Nasdaq down 33.86 (-1.3%) to 2,652.89

GLOBAL SENTIMENT

  • Nikkei up 0.9%.
  • Hang Seng up 1.9%.
  • Shanghai Composite up 2.2%.
  • FTSE-100 up 0.9%.

UPSIDE MOVERS

(+) SUG continues evening gain that followed Williams' $39 per-share offer.

(+) SSN buying additional Bakken acreage.

(+) CMCSA upgraded.

(+) DO upgraded.

(+) KOG upgraded.

(+) BBBB reportedly in talks to be bought.

(+) TIF downgraded.

DOWNSIDE MOVERS

(-) PTIE along with PFE and DRRX, gets complete response letter on Remoxy.

(-) DRRX along with PFE and PTIE, gets complete response letter on Remoxy.

(-) AEGR prices shares.

(-) IRE may raise money in swap.

(-) LUX downgraded.

(-) MU misses with earnings.

(-) ORCL beats with earnings but guides in line and key sales figures disappoint.

MARKET DIRECTION

Technology weakness fronted a broad-based decline Friday, the third straight drop. Disappointing earnings details from Oracle (NYSE:ORCL) and Micron Technology (NASDAQ:MU) hit Wall Street, while concern for certain Italian banks clouded the upbeat news on progress for Greece.

For the week, the S&P 500 Index fell 0.2% and the Dow industrials lost 0.6%. The Nasdaq Composite, however, gained 1.4% for the week, its first winning week in six.

U.S. economic data was mildly supportive early on. Data showed durable goods orders rebounded to gain 1.9% in May. Also reported, the U.S. economy grew at a slightly faster 1.9% clip in the first quarter compared to 1.8% revealed in the initial reading, although a touch shy of Wall Street expectations for a revised 2%.

European developments weighed on U.S. sentiment. In Italy, shares of banks UniCredit slumped as much as 8.9% and Intesa Sanpaolo SpA dropped 7.2% before trading was halted in several banks. A spokeswoman for Borsa Italiana cited a "technical problem around volatility" as a reason for the halt, according to MarketWatch. After trading resumed, shares in UniCredit ended 5.3% lower and Intesa lost 5%.

The news hit at a time when global markets are still sensitive to ongoing developments in Greece.

Early support in Friday trading did follow approval late Thursday from the EU, the IMF and the European Central Bank on plans for another round of spending cuts and tax hikes. The agreement paves the way for Greece to receive a further bailout package but the biggest hurdle will come next week, when Prime Minister George Papandreou must still persuade the country's lawmakers to approve the package.

Commodities finished mixed as gold slumped to its lowest level in more than a month while crude oil futures managed to shake off early losses to end in positive territory.

Light, sweet crude for August delivery finished up 0.2% to $91.16 a barrel. In other energy futures, heating oil was down 1.61% to $2.73 a gallon while natural gas was up 0.55% to $4.21 per million British thermal units.

In earnings, Oracle was down after the company reported a rise in fiscal Q4 profit that topped analyst expectations. However, traders look to be focusing on the report's details. Hardware sales dropped during the quarter in contrast to Oracle's previous forecast of a rise of up to 12%.

On its conference call, ORCL said it expects Q1 revenue growth in the range of of 9% to 12%. Non-GAAP EPS is seen in the range of $0.45 to $0.48 per share. The Street is at 9% revenue growth and earnings of $0.46 per share. Earlier, the company reported Q4 revenue of $10.77 bln, just ahead of the analyst consensus of $10.74 bln on Thomson Reuters. EPS $0.75, vs. expectations of $0.71 per share.

Also, Micron (MU) fell after it reported late Thursday Q3 sales of $2.13 billion, below the analyst consensus of $2.36 billion on Thomson Reuters. EPS was $0.07 per share, vs. expectations of $0.16 per share.