NEW YORK, May 10 (Reuters) - U.S. technology stocks could bounce at the open on Wednesday on positive news from two big tech names, but the broader market was expected to remain contained by nagging interest-rate uncertainty.
The world's No. 1 data networking equipment maker Cisco Systems Inc. (NasdaqNM:CSCO - news) posted expectation-topping results on Tuesday while International Business Machines Corp. (NYSE:IBM - news) said the world's No. 1 computer maker was on track for growth.
``Clearly Cisco's earnings and IBM's fireside chat yesterday are going to be a slight positive for the market,'' said Bryan Piskorowski of Prudential Securities. ``But we continue to be boxed in by economic news and the (Federal Reserve's interest-rate setting committee) meeting on Tuesday.''
The central bank on May 16 is widely expected to raise borrowing costs by an aggressive half a percentage point to head off inflation after a series of recent economic reports showing an uptick in inflationary pressures.
The Standard & Poor's 500 index futures for June was off 1.30 points at 1,418.50 while the Nasdaq 100 index futures lost 4.50 points to 3,449.00.
``I think any modest rally that could come with a positive tone set by Cisco and IBM will probably fail later in the day,'' said James Volk, co-director of institutional trading at D.A. Davidson & Co. ``I think people are still cautious.''
There were no important economic reports due out on Wednesday but Wall Street was awaiting news the following day on whether U.S. consumers kept up their frenzied pace of spending in April.
Retail sales for April, to be released at 8:30 a.m. EDT (1230 GMT) on Thursday, are expected to have risen 0.4 percent, or 0.3 percent when auto sales are excluded.
Evidence of strong consumer spending, a main factor in the U.S. economic expansion, could further cement a belief on Wall Street that the Fed is prepared to depart from its usual policy of raising rates in gradual 25-basis point increments. A basis point is a hundredth of a percentage point.
On Tuesday, San Francisco Federal Reserve President Robert Parry left the door open for a bigger-than-usual rate hike next week, saying it could be consistent with a cautious inflation-fighting policy.
In early trading, the U.S. Treasury 10-year note lost 17/32, with the yield rising to to 6.60 percent from Tuesday's close of 6.52 percent. The U.S. Treasury 30-year bond strengthened 5/32 with the yield dropping to 6.20 percent from Tuesday's close of 6.21 percent.
On Wednesday, the Nasdaq composite (^IXIC - news) lost 84.37 points, or 2.30 percent, to 3,585.01 -- adding to its 147-point slide on Monday.
Technology stocks slipped nearly across the board, and along with financials, dragged the blue-chip Dow Jones industrial average (^DJI - news) down 66.88 points, or 0.63 percent, to 10,536.75.
Broader market measures fell, with the Standard & Poor's 500 index (^SPX - news) down 12.03 points, or 0.84 percent, to 1,412.14, and the Wilshire 5000 index (^TMW - news) down 144.95 points, or 1.09 percent, to 13,118.28.
Among the stocks to watch on Wednesday, Cisco reported third-quarter operating profits that rose 58 percent while sales surged 55 percent as it sold more Internet gear to businesses, telephone and cable companies and Internet service providers. The company's stock closed at 62-3/4 ahead of the news.
IBM Chairman and Chief Executive Louis Gerstner on Tuesday told analysts that the company was on track for growth after a $1 billion first-quarter revenue shortfall, but he stopped short of promising sustained double-digit sales growth. IBM closed at 109.
Federated Department Stores Inc. (NYSE:FD - news), the parent company of Macy's and Bloomingdale's, was expected to report earnings on Wednesday. The company's stock closed at 36-6/16.
Upscale youth-oriented retailer Abercrombie & Fitch Co. (NYSE:ANF - news) on Tuesday said its first-quarter profits rose around 20 percent, in line with estimates. The company's stock closed at 12-4/16. |
