Stocks Set to Drift Upward at Open
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Stocks are expected to tick modestly higher on Tuesday as investors weigh hopes for a rebound in the economy and corporate profits next year against lingering questions about the timing and strength of the anticipated recovery.
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``The 'Cup-Is-Half-Full' school says there is recovery coming in the spring, and we're at the depths of the recession ... so why not make your stand here,'' said Larry Wachtel, market analyst at Prudential Securities. ``The 'Cup-Is-Half-Empty' school says you're taking a leap of faith about the spring.''
The promise of more gloomy news about the economy's current condition, and what is likely to be a dismal fourth-quarter corporate earnings period, will likely keep Wall Street's enthusiasm in check, he added.
Standard & Poor's 500 December futures were up 2.90 points at 1,132.40, while Nasdaq 100 futures for the same month were up 6 points at 1,573, pointing to a firmer open.
Wall Street may breathe a sigh of relief over the latest news from Enron Corp. (NYSE:ENE - news) after the fallen energy giant said late on Monday it secured an emergency round of financing of $1.5 billion to run a skeleton operation as it fired 4,000 workers.
Over the weekend, Enron filed the biggest bankruptcy in U.S. corporate history, and worries about the impact of its failure weighed on stocks on Monday. Enron rose to 55 cents in Tuesday's pre-open trading on the Instinet electronic brokerage system from 39 cents at Monday's close.
In other corporate news, Comcast Corp. (NasdaqNM:CMCSK - news) has sweetened its offer to acquire AT&T Corp.'s (NYSE:T - news) cable operation, sources familiar with the situation said, joining what is expected to be a heated bidding war for the broadband unit.
Conflict in the Middle East heated up as Israel launched air strikes across the West Bank and Gaza Strip and hit a police building near Palestinian President Yasser Arafat's main West Bank offices while he was inside. Arafat was unhurt, but Palestinian medics reported two dead and dozens wounded in the Gaza Strip attacks.
The bombings followed Palestinian suicide attacks in Israel over the weekend that left 25 people dead.
The increased tensions cast a dark cloud over a market already poised for a pullback after rallying sharply from the lows hit in the wake of the Sept. 11 attacks on the United States. The S&P 500 is still up 17 percent from a three-year low hit on Sept. 21.
In overseas markets, European stocks headed higher as investors took heart from French and UK economic data. French consumer confidence climbed in November, and British retail sales waned slightly, but remained healthy in the key Christmas shopping season.
The pan-European FTSE Eurotop 300 (.FTEU3) climbed 0.81 percent.
Shares in carmaker DaimlerChrysler fell after posting U.S. sales figures well below those of its peers late on Monday. Its U.S.-traded shares (NYSE:DCX - news) ended Monday at $41.01.
Tokyo stocks ended mixed as worries over credit risks slapped banking stocks lower, but a weaker yen lifted select high-tech issues. The benchmark Nikkei average (.N225) climbed 0.79 percent.
The schedule of economic data is light on Tuesday, but traders are anxiously awaiting more key reports due this week, including Friday's U.S. payrolls report.
So far this week, the economic news has been upbeat. Personal spending data, construction spending numbers and a closely watched gauge of the manufacturing sector all came in better than expected on Monday.
The positive data was overshadowed, however, by worries about the fallout from energy trader Enron Corp.'s (NYSE:ENE - news) tumble into bankruptcy and rising violence in the Middle East, sending stocks lower on Monday.
The gloomy political news helped erode investors' enthusiasm for an economic rebound next year that had helped the market rack up strong gains in November. Argentina's financial crisis added to Wall Street's jitters.
The technology-laced Nasdaq Composite Index (.IXIC) fell 25.68 points, or 1.33 percent, to end at 1,904.90. The blue-chip Dow Jones industrial average (.DJI) lost 89.60 points, or 0.89 percent, to 9,763.96. The broader Standard & Poor's 500 Index (.SPX) dropped 9.55 points, or 0.84 percent, to 1,129.90. |
