How far behind can the market be?
Thought by now this news would have already been discounted.
No surprise that all sectors of manufacturing will be affected by slump.
Friday March 9, 8:02 am Eastern Time
Techs Expected to Slump on Intel Warning
By Elizabeth Lazarowitz
NEW YORK (Reuters) - High-tech stocks are expected to slump at Friday's open after computer chip giant Intel Corp. (NasdaqNM:INTC - news) warned of disappointing sales and announced job cuts, dealing a further blow to a sector already reeling from a stream of earnings warnings.
Wall Street was also on pins and needles ahead of a key monthly employment report scheduled for Friday morning that is expected to show weaker labor market conditions, corroborating the outlook for aggressive Federal Reserve interest-rate cuts.
``Obviously, the market is still suffering from future earnings, and that will continue to be the case in the short term until we get a better picture of where the economy stands,'' said Peter Cardillo, director of research at Westfalia Investments.
With more than an hour to go before the opening bell, June Nasdaq 100 index futures were down 44.50 points at 1,930.50, pointing to a drop of 2.3 percent at the open.
Standard & Poor's 500 index futures for June were down 8.90
points at 1,270.60.
Intel, the world's No. 1 semiconductor maker, said its first-quarter revenue would slump as much as 25 percent from the prior quarter as the economic slowdown dampening demand for personal computers spread to networking, communications and server components.
The company also said it would reduce staff by about 5,000 people over the next 9 months.
``They're going to go down,'' said Robertson Stephens PC and chip analyst Dan Niles of Friday's anticipated action in chip stocks. ``You can try to ignore the bad news all you want. The bottom line is, it's getting worse and there's no end in sight.''
Dampening sentiment further was news that Merrill Lynch cut its investment rating on U.S. mobile phone giant Motorola (NYSE:MOT - news), according to market sources.
The jobs report, due at 8:30 a.m. EST could yield clues to whether the Fed will come to the economy's rescue with a widely anticipated half-percentage point cut in rates at its March 20 policy-setting meeting. The hope is that lower borrowing costs will encourage spending and thus stimulate economic growth.
Economists in a recent Reuters survey predicted payrolls gained just 62,000 in February, following January's increase of 269,000. They saw the unemployment rate standing pat at 4.2 percent.
Average hourly earnings -- watched as a measure of wage inflation -- were seen posting a rise of 0.3 percent in February, after January's unchanged reading.
``Today's employment numbers probably will add some more insight to where the economy is really headed -- if we are in recession or the brink of recession,'' Cardillo said.
The Intel news rippled through overseas markets, buffeting
technology stocks around the globe. Japanese high-tech shares suffered, slapping the benchmark Nikkei average (.N225) down despite gains in several ``Old Economy'' stocks.
The Nikkei finished Friday's session down 0.18 percent.
European shares were also limping even as investors fled to more defensive sectors. The pan-European Eurotop 300 index (.FTEU3) was down 0.73 percent.
Technology stocks were feeling the heat for the second session in a row after a dour profit forecast by Internet media company Yahoo! Inc. (NasdaqNM:YHOO - news) drove investors out of high-tech stocks on Thursday.
But blue-chip stocks rose for a fifth consecutive day during Thursday's session, a winning streak unseen since last December, as investors fled to companies that may better weather the soft economy.
The Dow Jones industrial average (.DJI) gained 128.65 points, or 1.20 percent, to end at 10,858.25, which was also its highest finish in three weeks. The Dow has gained nearly 410 points in the last five sessions, or almost 4 percent.
The Nasdaq Composite Index (.IXIC) dropped 55.19 points, or 2.48 percent, to 2,168.73, after three straight sessions of gains this week. Cisco Systems Inc. (NasdaqNM:CSCO - news), the world's No. 1 maker of gear that powers the Internet, led the technology-packed index lower with a $1-3/16 slide to $22-13/16.
The broader Standard & Poor's 500 Index (.SPX) nosed up 2.87 points, or 0.23 percent, to 1,264.76.
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