M A R K E T .. S N A P S H O T -- Stocks to open in the red
Housing starts surge 6.3% in January
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 8:49 AM ET Feb 19, 2002
NEW YORK (CBS.MW) -- Stocks are set to drip in more red ink Tuesday as sellers look to stay in charge amid nagging accounting worries and little incentive to snap up equities as the fourth-quarter earnings season winds down.
March S&P 500 futures declined 6.90 points, or 0.6 percent, and were trading 6.40 points below fair value, according to HL Camp & Co. And Nasdaq futures gave up 18.50 points, or 1.3 percent and were trading about 17.60 points under fair value.
The day's dose of economic news came in the shape of January housing starts, which swelled 6.3 percent to a 1.678 million rate, much higher than the 1.60 million rate that had been expected by economists polled by CBS.MarketWatch.com.
Other indicators that will grab attention this week include the January consumer price index and January leading economic indicators, set for release on Wednesday and Thursday, respectively. Check economic calendar and forecasts.
IBM in focus
Investors will keep close watch on Big Blue's performance.
IBM (IBM) took a 4.6-percent beating on Friday amid a New York Times story taking issue with the hardware giant's accounting of the sale of a business unit to JDS Uniphase.
IBM said in an interview with the Wall Street Journal that it would begin releasing more details in its financial statements on items that had typically been lumped together. Big Blue, for example, said it would now supply figures on such items as pension-fund gains and sales of real estate and intellectual property in its annual report and quarterly SEC filings. But IBM defended its current practices, telling the Journal that they had been compliant with accounting guidelines.
"Since earnings season is winding down there's not much potential for positive news to help the market out near-term. The fear that investors have about inaccurate accounting is quashing any potential for a sustainable market rally," opined Louis Navellier, portfolio manager of the Navellier Performance Funds.
The fund manager expects the top averages to be stuck in the mud until accounting woes lift.
"What it will take to extinguish these accounting fears is for a flagship company -- like IBM -- to go through an investigation process and come out clean. Until the public sees some evidence that these fears are inflated beyond reality, companies will have a tough time benefiting from any possible positive news. We expect the market to remain in a trading range for the next several weeks," Navellier continued.
Mundane trading characterized the pre-open session so far.
Fiber-optic firm Ciena (CIEN) erased 7 cents to $8.66 in the pre-open after announcing on Monday that it was nabbing rival ONI Systems (ONIS) in a stock deal valued at around $866 million. Ciena told investors that it anticipates a more rapid return to profitability thanks to the cost-savings generated by the acquisition.
In earnings news, Dow component and discount retail colossus Wal-Mart (WMT) reported fourth-quarter earnings-per-share that were in line with the Wall Street consensus estimate. And revenue came in a whisper ahead of expectations.
In analyst actions, UBS Warburg upped its view on Dow component General Motors (GM) to a "buy" from a "hold" while maintaining a "reduce" rating on rivals Ford (F) and DaimlerChrysler (DCX). Warburg said GM has become a lower cost producer compared with Ford and Daimler over the past couple of years, which should allow it to protect market share.
And Dow company Boeing (BA) was lowered by Credit Suisse First Boston to a "'buy" from a "strong buy," mostly due to price concerns following its recent appreciation. CSFB told clients it sees a lack of catalysts over the next quarters as aircraft orders stagnate. Boeing shares declined 60 cents to $44.30 in pre-open dealings.
Treasurys get more mileage
Government bonds extended gains, with long-dated maturities enticing the greatest amount of buyers.
The 10-year Treasury note put on 5/32 to yield ($TNX) 4.845 percent while the 30-year government bond climbed 3/32 to yield ($TYX) 5.36 percent.
In the currency sector, the dollar sprinted 0.8 percent to 133.71 yen while the euro gave up 0.1 percent to 87.02 cents. |
