The Nasdaq suffered steep losses last week, as interest-rate concerns
again appeared, and violence in Iraq continued to shadow the market. Gross
Domestic Product grew less than expected in the first quarter, potentially
downplaying interest rate hike concerns. However, within that report, gauges
measuring inflation increased at a faster clip in the period. Kent Engelke,
capital markets strategist for Anderson & Strudwick, said to The Wall Street
Journal Online, "Against this backdrop it is no wonder why the markets have
been jilted by interest-rate fears . . . Interest rates are the largest
component of most valuation models . . . higher interest rates suggest lower
stock prices. There are fears that these higher rates will stifle the economy
and squash this emerging recovery." JDS Uniphase was a bad tech influence,
despite posting a narrower quarterly loss. The fiber-optic parts maker
forecast current-quarter earnings would land a penny shy of Street estimates.
Within the communications equipment space, Nortel Networks was a weight. The
firm fired its three top executives and forecast a 50% drop in its 2003
earnings. Elsewhere, chip shares dragged on LSI Logic's forecast for second-
quarter sales to land below expectations. Still, a point of excitement was
Yahoo! rival Google's IPO filing of up to $2.7 billion. Despite the surface
bad news, the first-quarter season has generally been very positive, which
could also be a negative market force. "The concern is that the first quarter
is the best it's going to be, and from now on each quarter's earnings growth
will decelerate from the first quarter," said Larry Wachtel, senior vice
president at Wachovia, to Reuters News. This week, as earnings season winds
down, economic reports will be in focus, particularly Friday's Employment
Report. Investors will continue to decide whether to celebrate a stronger
economy or fear the inevitable rise in interest rates.
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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