Stock Futures Continue To Slide (but may be careful late day)
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
12:37 (Dow Jones) June S&Ps make new session lows as June DJIA continues to
fall. Traders say the markets are likely to grind weaker, but there could be
some very late-day attempts to bid up June S&Ps. "Mondays are usually strong
the day before the Fed, so that's something to think about," one trader
says. (DMC)
12:33 (Dow Jones) AMR's integration of TWA is going well so far, says
Merrill Lynch, a day after AMR met with analysts. "Although full integration
is not expected for at least two years, and major challenges lie ahead, we
are encouraged by the initial results." The biggest risk, Merrill thinks, is
the integration of work forces. "However, so far, AMR has refrained from
'rocking the labor boat."' (GS)
12:23 (Dow Jones) One of the reasons why the University of Michigan
confidence data rose the way it did is because consumers are counting on a
big amount of rate cuts ahead, says someone who's seen the report. The Fed
had better deliver, or confidence could be back on the downward spiral.
(MSD)
12:10 (Dow Jones) Good times ahead in 2002 for hotels, according to a
Pricewaterhouse report out Friday (see full Wall Street Journal story under
industry code i/lod), but you wouldn't know it from the sector's movement by
mid-session. The Dow Jones lodging index is up only 0.89%, and key component
Marriot International (MAR) is actually off a tad. Though the accounting
firm predicts a rebound in corporate travel and other supportive factors,
the near-term outlook may be making investors nervous. (GC)
11:54 (Dow Jones) Merrill Lynch says retail stocks are at the very beginning
of the fourth phase of the retailing stock cycle, characterized by upside
earnings surprises, declining worries about the consumer, and superior
relative performance. Says retailers could outperform the market for balance
of the year. (TG)
11:39 (Dow Jones) According to Michigan report, the biggest inverse in
sentiment came from households with >$50K income. The increase was tied to
higher stocks and lower interest rates. If that's the case, the gains may be
hollow because stocks are still overvalued and the economy is losing further
steam. (GK)
11:29 (Dow Jones) The potential rate cut may be on everyone's mind over the
weekend but don't disregard the major earnings news we'll see next week.
We'll hear from the Dow components that haven't reported - Hewlett-Packard
(HWP), Home Depot (HD), and Wal-Mart (WMT) - plus Computer Sciences (CSC),
Dell Computer (DELL) and Deere (DE). If that's not enough, toss in a slew of
retailers, including Gap (GPS), JC Penney (JCP), and Kmart (KM). (CRW)
11:23 (Dow Jones) Reason for ECB rate cut may be quite straight forward.
According to Stephen Lewis at Monument Derivatives, ECB was nervous about
German recession coinciding with 2002 introduction of EUR notes and coins.
"The political consequences of such a conjunction might be disastrous," he
warned. (NEH)
11:12 (Dow Jones) Lehman technician Jeff deGraaf is well aware of the "never
short a dull market" axiom, but says the application is more precise on
tests and bottoms than in struggling markets like this one at resistance.
The failing momentum developing over past few days is pushing a little
harder, and "virtually all of our intermediate technical indicators suggest
a weak environment for the next several weeks, and we are playing
accordingly." (TG)
11:04 (Dow Jones) HSBC thinks the Fed will only go 25 BP on Tuesday based on
the better economic data and less favorable inflation data. (MSD)
10:50 (Dow Jones) On an average weighted basis, Fed funds futures are
pricing a 57.5% chance of a 50 BP cut on Tuesday, down from 73% on
Wednesday, says Poser Global Market Strategies. (MSD)
10:42 (Dow Jones) There are thousands of potential acquisition targets among
the current crop of private, venture-backed firms, but most will probably
end up out of business, according to VentureWire. Of the 2,507
capital-hungry firms in VentureWire's data base, "a relatively small
proportion have already closed their doors, while the rest are tightening
their belts, trolling for capital, adjusting expectations, and quite often
looking for an acquirer at fire-sale prices," says VentureWire publisher
Brian O'Connell. In the first third of 2001, M&A activity among private,
VC-backed companies slid 28% to 347 deals. (JAW)
10:30 (Dow Jones) Here's an unabashed recommendation from Merrill Lynch.
Universal Compression Holdings (UCO), a natural gas services company, is a
"great buying opportunity" following shares' 20% decline over the past week,
says analyst Kevin Simpson. "The strong growth fundamentals that underlie
our buy recommendation remain very much intact," Simpson says. (KJT)
10:22 (Dow Jones) With quote of about 95.71 to 95.72, economist says May Fed
funds pricing in roughly 70% to 75% chance Fed cuts by 50 BP next week. July
Fed funds at 96.05 to 96.04 said to be looking at about 15% of another 25 BP
by July vs. about 30% before Michigan number. (SPC)
10:19 (Dow Jones) Investors have to be happy with the latest rumor
concerning the fate of Schering Plough (SGP). The stock climbed over 7%
following a report in Business Week that Merck (MRK) is looking to acquire
the pharmaceutical company. Schering denies company is for sale. (SPJ)
10:10 (Dow Jones) You could almost see this coming. Stocks taking hit after
Street digests sentiment numbers and the impact the cheery results may have
on Fed policy. DJIA now off 63 at 10846, Nasdaq off 10 at 2119, and S&P 500
off 2 at 1252. (TG)
10:03 (Dow Jones) EUR/USD has now seen new lows for the day at $0.8747. The
yen is firm on the EUR/JPY cross at Y106.90, as cross-trading dominates the
market. USD/JPY is at Y122.10; EUR/USD at $0.8755. (JRH)
9:58 (Dow Jones) Stocks getting moderate lift from decent reading on
sentiment. DJIA up 3, Nasdaq up 9, S&P 500 up 4. Watch to see if stocks
reverse, though, as this is further evidence that Tuesday may be it for Fed.
Of course, most folks would see that as good news. (TG)
9:54 (Dow Jones) The smiles are coming back. The Univ. of Michigan Consumer
Confidence Index rose to 92.6 vs. 88.4 in April. Current conditions stood at
102.1 mid-May vs. 98.0 the prior month, and expectations were at 86.5 after
82.2 in April. (MSD)
9:48 (Dow Jones) Lehman Brothers (LEH) has gotten another vote of confidence
from analysts. On Friday, Jim Mitchell of Putnam Lovell Securities lowered
2001 and 2002 earnings per share estimates for brokerages, including Lehman,
but he expects Lehman will hold up better than expectations, given
meaningful market share gains. On Monday Merrill Lynch analyst Judah
Kraushaar lowered estimates on the brokers as well, but left Lehman
unchanged, saying it was a special case because of its market share gains.
(CWM)
9:40 (Dow Jones) In his annual meeting with analysts on Thursday, IBM chief
executive Lou Gerstner said the company's largest single business, services,
makes it more recession proof than competitors. The characterization was a
little too upbeat for Kevin McCarthy, of Credit Suisse First Boston. "We
continue to believe IBM will not emerge unscathed from the current worldwide
slump in Information Technology spending," McCarthy says. (KJT) |
