The end of June encompasses many deadlines that have held tech stocks
captive in the preceding weeks. The FOMC meeting, the close of the second
quarter and the Iraqi handover of power are all market distractions that have
kept trading light. "I think it's just going to be summer doldrums until the
end of the month," said Matt Ruane, director of U.S. equities and sales
trading at Credit Lyonnais Securities, to Dow Jones Newswires. Concerns about
higher interest rates and their evil twin inflation were in focus on some key
economic reports. The CPI and core readings were muted, initially relieving
investors, but that feeling was soon dissipated by a strong rise in producer
prices. Jeffrey Saut, chief investment strategist at Raymond James Financial,
commented in a Reuters news piece, "The (producer price index) came in way
above expectations. It caused some concerns about the potential for a 50-
basis-point ratchet rather than a 25-basis-point rise" at the FOMC meeting at
the end of June. Still, besides all the non-corporate activity, tech stocks
were active this week. Oracle posted stronger quarterly results, but some
analysts were disappointed by the firm's license sales. Jabil Circuit added
more pressure, after it provided a disappointing current-quarter outlook.
"Jabil Circuit is down and that's got a whole bunch of the tech-sector stocks
hit," said Scott Lynch, managing director of U.S. trading at Credit Suisse
First Boston, to Reuters News. Red Hat and Adobe Systems also slid on their
financial reports. Still, Gateway was a bright spot, after the personal
computer maker raised its quarterly revenue outlook and forecast a narrower
operating loss. Solectron rallied as its third-quarter earnings beat
expectations, and it provided better-than-expected guidance for its fourth
quarter. Investors will likely remain vigilant for another week ahead of an
eventful end of month.
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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