M A R K E T .. S N A P S H O T -- Stocks looking weak on Europe woes
Warnings from across the pond to weigh on open
By Emily Church, CBS.MarketWatch.com
Last Update: 7:51 AM ET Jul 5, 2001
LONDON (CBS.MW) - European markets look to set the tone for the U.S. for a change as U.S. stock futures trade down Thursday in an attempt to price in the sell-off in the European tech and telecoms group ahead of the open in New York.
September S&P futures are sliding 12.60 to 1,233.00, which is about 8 1/4-points below fair value, according to figures provided by HL Camp & Company. Nasdaq 100 futures are slumping 26.00, or about 15 1/4-points below fair value, to 1,822.00.
European markets stumbled overnight after U.K. telecoms supplier Marconi (MONI) warned its operating profits will halve in this fiscal year. The shares had been suspended all day Wednesday with U.S. markets closed for Independence Day holiday.
The shock warning dragged down related stocks Thursday with leading sector issues like Alcatel (ALA) and Nokia (NOK) marking losses. The warning further raised considerable alarm that the European market can't offer any relative safety from the plunge in capital expenditures in technology in the U.S.
Stocks got no immediate relief from the Bank of England, which left interest rates unchanged Thursday as expected. The European Central Bank also held on rates Thursday as inflation concerns come to the fore on the Continent.
Sector Watch
A profits warning Thursday from semiconductor equipment maker ASM Lithography (ASML) could also weigh on the chip group ($SOX). Shares of Intel Corp. (INTC), as a possible indication, were down 26 cents to $30.20.
Other leading telecom shares were also lower, including Marconi rival Cisco Systems (CSCO). The Marconi warning may put added pressure on the telecoms group in the U.S. although the weakness in the group has been flagged repeatedly amid previous warnings, such as from Nortel Networks (NT).
The wider brokerage group ($XBD) may come in focus on a second quarter earnings warning from leading Nasdaq market maker Knight Trading Group (NITE). Knight, which warned on the first quarter as well, cited a difficult market including the impact of decimalization as well as the technical glitches on Nadsaq that harmed trading on the day changes to the Russell 2000 index took place. See more on Knight.
U.S. action ahead of Fourth
Selling pressure hobbled the tech sector in a shortened session on Tuesday -- particularly the software group -- where most of the warnings were concentrated. Internet stocks also retreated, as did retail, financial and paper shares. And chemical issues were in a funk following bad news from Dow company DuPont. Green spots emerged in the gold, oil service, chip, biotech and natural gas groups. Click here for latest market stats.
"The market is trying to stabilize [despite] the profit warnings. There are some pockets of strength in Tuesday's market and breadth held up well," said Joseph Gunnar's chief market strategist Donald Selkin.
The Dow Jones Industrial Average ($INDU) shaved 22.41 points, or 0.2 percent, to 10,571.31. Putting pressure on the Dow were shares of DuPont, AT&T, General Electric, IBM, Philip Morris, Wal-Mart and Walt Disney. Gainers included Honeywell, Intel, United Technologies and Coca-Cola.
Impacting the Dow was news that the 20-member Commission for the European Union rejected General Electric's bid to acquire Honeywell in its first such move between two U.S. companies. The EU said a merger "would have severely reduced competition in the aerospace industry and resulted ultimately in higher prices for customers, particularly airlines."
The Nasdaq Composite ($COMPQ) gave back 7.76 points, or 0.4 percent, to 2,140.96 while the Nasdaq 100 Index ($NDX) slipped 4.77 points, or 0.3 percent, to 1,822.30.
Capping the Nasdaq's downside were gains in shares of Qualcomm, up over 10 percent, Sun Micro, up 0.9 percent, Oracle, up 1 percent, and Intel, up 1.4 percent.
The Standard & Poor's 500 Index ($SPX) edged down 0.2 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks slipped 0.3 percent.
Volume came in at 624 million on the NYSE and at 892 million on the Nasdaq Stock Market. Market breadth was mixed, with advancers outpacing decliners by 16 to 14 on the NYSE while losers beat winners by 19 to 16 on the Nasdaq.
Read for the latest individual stock market action.
Treasury focus
Treasurys took a break after staging an impressive rally Monday.
The 10-year Treasury note was off 14/32 to yield ($TNX) 5.385 percent while the 30-year government bond shaved 17/32 to yield ($TYX) 5.725 percent.
Thursday will see the release of the NAPM non-manufacturing index for June. View and economic calendar and forecasts.
-------------------------------------------------------------------------------- |
