NEW YORK, March 21 (Reuters) - U.S. stocks were expected to dip lower at the opening bell on Tuesday ahead of a Federal Reserve meeting that is widely expected to boost interest rates again.
Analysts noted that the market does not expect any surprises from Chairman Alan Greenspan, confident that the Fed chief will raise borrowing costs by another 25 basis points this afternoon.
Still, investors will hold off on taking heavy positions ahead of the announcement, especially on the back of another down day for the Nasdaq market, analysts said.
``All eyes will be on the Fed,' said Peter Cardillo, director of research at Westfalia Investments. ``It will be a very light opening, a trendless opening with the market doing its own thing until we hear from the Fed.'
The Standard & Poor's 500 futures index for June fell 2.10 points to 1,476.00 while the Nasdaq futures index for June lost 32.50 points to 4,320.00.
Technology stocks looked poised to head lower, extending losses that began early last week. Market watchers noted that Nasdaq will continue to test new lows before making a solid rebound.
That shift out of Nasdaq names has helped boost the Dow Jones industrial average (^DJI - news), which on Monday added 85.01 points, or 0.80 percent, to close at 10,680.24.
The Nasdaq composite index (^IXIC - news) logged its third largest point loss ever, falling 188.13 points, or 3.92 percent, to 4,610.00. Biotech stocks took a pounding, pulling Nasdaq down 8.69 percent from its March 10 high of 5,048.62.
The Standard & Poor's 500 index (^SPX - news) slipped 7.84 points, or 0.54 percent, to 1,456.63.
``We may see a little profit-taking in the Dow but Nasdaq may want to test the lows posted last week before any serious rebound can take place,' Cardillo said.
But Joseph Barthel, chief investment strategist at Fahnestock & Co., said Nasdaq will resume its leadership position.
``I dont think the current weakness in Nasdaq changes anything,' he said. ``This pullback comes as a result of technical factors. The Dow and S&P were down hard since January, and conversely the Nasdaq went straight up. I don't think there really is much more than that.'
The 30-year U.S. Treasury bond closed up 1/32 on Monday pushing the yield to 6.00 percent.
Beyond the Federal Open Market Committee (FOMC) meeting, this week's economic docket is light. The market will see January trade data Tuesday followed by durable goods orders for February and jobless claims data on Thursday. Also Thursday, the Fed will release minutes from February's FOMC meeting.
Earnings announcements and profit warnings have also begun to shape trading with investment banks posting results this week and other industries revising expectations.
Investment bank Goldman Sachs Group Inc. (NYSE:GS - news) is due to post earnings before the market opens. Analysts expect the firm to report record or near-record numbers following rival Lehman Bros. Holdings' (NYSE:LEH - news) record results.
3Com Corp (NasdaqNM:COMS - news) posted third-quarter results on Monday night that topped forecasts. The company said it plans to exit the high-end data networking business, ceding the market to larger competitors such as Cisco Systems (NasdaqNM:CSCO - news).
The move was part of a series of actions aimed at spurring profits while cutting the work force by as much as 25 percent.
Also among the companies whose stocks may be hot, American Home Products (NYSE:AHP - news) signed a deal to sell its Cyanamid Agricultural Products business to BASF AG for $3.8 billion in cash plus debt.
Risk management firm E.W. Blanch Holdings (NYSE:EWB - news) warned its first-quarter earnings would be in the range of $0.10 to $0.35 per share compared with analysts' targets of $0.95 a share.
In another blow to Big Tobacco, a California state jury ruled that Philip Morris Cos Inc. (NYSE:MO - news) and R.J. Reynolds Tobacco Holdings (NYSE:RJR - news) misrepresented the health dangers of their products and should pay for it, the Wall Street journal reported. |
