Tech investors had to hold their breath for most of last week, as the
market-moving employment report and Intel's mid-quarter update did not arrive
until the end of the week. Still, there was plenty of newsworthy items to move
the market ahead of the anticipated reports. Stocks sold off after Federal
Reserve Chairman Alan Greenspan, in a speech, noted that interest rates will
need to rise to "a more neutral state" at some point. Meanwhile, the
Semiconductor Industry Association said that worldwide sales of chips rose
27.4% in January from one year ago. The trade group also said that the
industry is poised to grow more than 19% in 2004. Meanwhile, J.P. Morgan
downgraded Intel because of signs of slowing laptop computer sales. Although
the stock brushed off the research and moved higher, Intel ultimately narrowed
its sales forecasts to $8.0 billion to $8.2 billion for the current quarter,
bringing the mid-point of the range slightly below its earlier estimate. The
other major news item of the week was the employment report, which failed to
live up to investors' expectations. Job growth was much weaker than expected
in February, and January growth was revised lower, raising concerns that the
labor market is not recovering as strongly as hoped. The report did ease some
of the concerns about higher interest rates, which could continue to help
promote economic growth, but it did raise concerns about the viability of the
current economic forecasts for the full year. "There wasn't anything in this
report that was at all encouraging," said Carl Tannenbaum, an economist with
ABN-AMRO, in a Dow Jones story. Tannenbaum continued, "It's a simple
formulation. If we do not begin to restore jobs and the income that goes with
unemployment, spending in the second half of this year will not be sufficient
to sustain the level of economic activity we had early this year."
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
information, please visit our web site at http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
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