WALL STREET WEEK AHEAD-Earnings to drive market up
By Amy Collins
NEW YORK, Jan 17 (Reuters) - After shaking off a bad case of interest rate jitters, Wall Street is expecting a heavy dose of strong corporate earnings to push stocks deeper into record territory this week.
``Primarily it's going to be an earnings-driven week,' said Guy Truicko, portfolio manager at Unity Management in Garden City, N.Y.
On Thursday, Intel Corp. (NasdaqNM:INTC - news), the world's leading semiconductor maker, came out with positive earnings and an optimistic outlook for future growth. The news all but announced an all-clear to dive back into all-things technology.
``Certainly when you have a leader like that come out and say good things, it's good for the sector,' Truicko said. ``The stocks are certainly anticipating good news...the Intel announcement says it all.'
By Friday, it might as well have been the end of 1999 all over again with all major stock indices at or near record highs.
The Dow Jones industrial average (^DJI - news) closed at a record high of 11,722.98 and was up 1.74 percent for the week.
The technology-rich Nasdaq composite index (^IXIC - news) closed just shy of a record, at 4,064.27, all but erasing the 10 percent dip it suffered since Jan. 3. It was up 4.68 percent for the week.
``I still think we're positioned...to extend the October rally,' said Gregory Nie, technical analyst at First Union Securities Inc. in Chicago. Nie said the dip in the Nasdaq, even though it fell more than 10 percent off its high, was not a traditional correction since the index has shot up so high in recent months.
The Standard & Poor's 500 index (^SPX - news) also just missed a record close at 1,465.15, adding 1.64 percent for the week.
Even the Russell 2000, (^RUT - news) a measure of smaller cap stocks, closed at a record high at 507.56.
The earnings calendar is heavy this week with reports from powerhouses such as International Business Machines Corp. (NYSE:IBM - news), Microsoft Corp. (NasdaqNM:MSFT - news), Citigroup Inc. (NYSE:C - news), General Motors Corp. (NYSE:GM - news), AMR Corp. (NYSE:AMR - news), Lucent Technologies Inc.(NYSE:LU - news), Warner-Lambert Co. (NYSE:WLA - news)Atlantic Richfield Co.(NYSE:ARC - news), Advanced Micro Devices Inc.(NYSE:AMD - news) and Caterpillar Inc.(NYSE:CAT - news).
``The dynamics of the market are pretty good,' said Rick Meckler, the senior managing director at Liberty View in Jersey City, N.J. ``The only thing that will stop it is a severe mood shift.'
Stock and bond exchanges were closed in the United States in observance of Martin Luther King Day on Monday, although late in the day Motorola Inc. (NYSE:MOT - news) reported stronger-than-expected fourth-quarter earnings that more than tripled year-ago levels.
The Schaumburg, Ill.-based maker of computer chips and telecommunications equipment said operating profit, excluding one-time items, rose to $514 million, or 82 cents per share, from $159 million, or 26 cents per share, in the year-earlier quarter. The company attributed the gains to strong wireless phone sales.
On average, analysts were forecasting 81 cents per share, according to First Call/Thomson Financial estimates.
``The company has a bit of explaining to do on the slowdown in revenue growth,' said Wojtek Uzdelewicz, telecommunications analyst with SG Cowen & Co. ``They came in a little bit light versus my top line estimate.'
Although the economic calendar is light, December housing starts and the Federal Reserve's Beige Book of economic conditions will be released on Wednesday. The November international trade results are due Thursday.
The benchmark U.S. Treasury 30-year bond ended the week down 13/32 lower with the yield at 6.69 percent. The bond was pressured through the week by fears that the Federal Reserve wold aggressively hike interest rates at its February 1 and 2 meeting. But remarks from Fed chief Alan Greenspan and calm inflation data at the end of the week reassured Wall Street that only a quarter-point hike is likely for the February meeting.
The week will end with a double witching day, when options and futures expire.
``In my mind, you will definitely see a lot of volatility going into options expirations,' Meckler said. ``There is a potential for the market to make really big swings.' |
