"Before the Bell" by The Post:>>>U.S. Stocks Seen Opening Higher
washingtonpost.com
By Margaret Webb Pressler
Washington Post Staff Writer
Friday , June 16, 2000
The market is trying to keep yesterday's gains going this morning, but the direction of stocks today will be affected by weaker-than-expected housing starts and conflicting earnings reports.
Early indications are that stocks will rise at the opening bell, if modestly. Shortly before 9 a.m., the S&P futures index is trading almost three points above fair value. Typically, each point of difference between the index and fair value represents about eight points of the Dow Jones industrial average. Nasdaq futures are also trading higher this morning.
That optimism could fade as word spreads that Xerox has released another warning early this morning about its earnings, saying it won't meet forecasts for the second quarter.
There was also some economic news out this morning that gives investors yet another peek under the hood at the nation's economic engine. Housing start figures released by the Commerce Department this morning showed a decline of 3.9 percent from April, weaker than the expected two percent. Housing starts are considered one of the most interest-rate sensitive sectors of the economy, so today's data should give market watchers a sense for how much the Federal Reserve's rate hikes are cooling things off. New building permits, a sign of future construction activity fell a bigger-than-expected 4.3 percent in May to a rate of 1.49 million.
Technology stocks could give Wall Street a lift today, after two tech firms reported better-than-expected earnings after yesterday's closing bell. Linux packager Red Hat said its revenue grew 95 percent in the quarter, resulting in a smaller loss than Wall Street analysts had predicted. The company lost just two cents a share, compared with forecasts of a loss of four cents. And Adobe Systems also reported healthy earnings, with a profit of 51 cents a share, which beat Wall Street estimates by three cents. Adobe may not get the boost it would like from that news, though, as the company also reported that it will miss its $100 million revenue target for its new publishing software, InDesign.
Investors will be weighing those reports against the disturbing news from banking giant Wachovia yesterday that it would not meet earnings estimates.
Airline stocks will also be in the spotlight after a report in the Wall Street Journal this morning that TWA is in merger discussions with AirTran Holdings, the low-cost airline that used to be called ValuJet. Those discussions come after reports that American Airlines has had preliminary talks with Northwest Airlines. Together, these developments could raise more concern among federal antitrust regulators who must approve the proposed union of US Airways and United Airlines.
Overseas, markets in Europe are getting a lift from a proposed bank merger in Germany, potentially combining Dresdner Bank with Commerzbank. Stocks in Paris, London and Frankfurt are all rising this morning. In Asia, stocks in Hong Kong rose sharply, while stocks in Tokyo rose more modestly. The Nikkei 225 gained 20.39 to close at 16,318.31.
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