M A R K E T .. S N A P S H O T -- Investors girding for GDP numbers
Will markets get a negative number?
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 8:29 AM ET Aug 29, 2001
NEW YORK (CBS.MW) -- Investors are bracing for the revision to the second-quarter gross domestic product figures Wednesday, which could reveal that the economy contracted for the first time in over eight years.
A survey of economists conducted by CBS MarketWatch.com expects GDP to be revised down to 0.1 percent from the previously reported 0.7-percent growth rate. and check economic calendar and forecasts.
Peter Boockvar of Miller, Tabak & Co. said that while the number is backward-looking, a downward revision with a minus side in front of it would affect investors' psychology and bring with it recession fears and downside risks to consumer confidence.
September S&P 500 futures gave up 2.60 points, or 0.2 percent, and were trading roughly 2.40 points below fair value, according to HL Camp & Co. Nasdaq futures, meanwhile, backpedaled 14.00 points, or 0.9 percent.
Steve Young, senior market strategist at Banc of America Capital Management, said that while tech sector gains may be capped over the longer haul by excessive valuations, a "market weight" position in the group may be the best allocation strategy over the short term.
In fact, Young notes that with few exceptions, the tech sector has led market performance during each significant rally in the S&P 500 this year.
Pre-market trades
Among shares trading before the official opening bell, Cisco Systems(CSCO) fell over 1 percent in Instinet while fellow networker Juniper Networks (JNPR) dropped 4 percent. Merrill Lynch lowered earnings estimates on Juniper and issued cautious comments on the segment. .
Gateway (GTW) saw its shares rise 40 cents to $9 in European trading following its job cut announcement late Tuesday.
Gateway will eliminate 5,000 workers, or 25 percent of its global staff, which could produce savings of $300 million a year. The company will take a third-quarter charge of up to $475 million related to the restructuring. The PC maker said it expects to post a "slight loss" in the third quarter vs. current analyst expectations for a loss of a penny a share. But the company added that it's on track to register a fourth-quarter profit, which compares to the Wall Street expectations for a 3-cent-a-share profit.
Goldman lowered its third-quarter earnings estimates on Gateway but upped its profit projections for the fourth quarter. Analyst Joe Moore told clients that he views Gateway's news as a "moderate positive" in aggregate and feels the stock could be "interesting" for long-term value oriented investors but sees few near-term catalysts for the stock. CS First Boston analyst Kevin McCarthy said Gateway is "bailing water out of the ship as fast as it flows in." The analyst said that while fundamentals continue to deteriorate, the company's possible savings grace this year is customer acceptance of Windows XP, which targets Gateway's core market."
Meanwhile, Intel (INTC) edged up 4 cents to $28.55 in the pre-market. Prudential Securities said in a research note that it believes third-quarter business is tracking expectations thus far and feels the company has the "most favorable competitive position it has had for years."
In merger news, Mead Corp. (MEA) and Westvaco (W) agreed to merge in a $3 billion all-stock deal that'll create an industry behemoth with more than $8 billion in annual revenues.
Treasury focus
Government bond issues extended gains as fixed-income investors expect weak economic data to keep rate cut hopes alive and kicking.
The 10-year Treasury note tacked on 1/4 to yield ($TNX) 5.81 percent while the 30-year government bond put on 11/32 to yield ($TYX) 5.385 percent.
In the currency sector, the dollar slipped 0.4 percent to 119.43 yen while the euro shed 0.1 percent to 91.20 cents. Japan's Nikkei 225 Index plunged below 11,000 and ended at its lowest level in 17 years.
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