Stocks Are Seen Edging Down at the Open
Tuesday October 29, 8:52 am ET
By Denise Duclaux
biz.yahoo.com
NEW YORK (Reuters) - Stocks are seen inching lower at Tuesday's open, with investors searching for direction as the earnings season winds down after hoisting the market higher for three weeks in a row.
"We have seen a market that has surpassed drastically reduced expectations," said Bryan Piskorowski, a market commentator at Prudential Securities. "Earnings season has brought us from oversold to overbought, and now we are being forced to justify the run."
Roughly three-quarters of the Standard & Poor's 500 companies have posted their third-quarter earnings -- and more than half of those have topped Wall Street's lowered estimates. The better-than-expected earnings have fueled a turnaround in the market and lifted the broad Standard & Poor's 500 index 11 percent off five-year lows hit on Oct. 9.
But the pace of earnings reports is slowing on Wall Street, and worries over the economy linger. A slew of data this week -- including advanced gross domestic product (GDP) for the third quarter, October unemployment statistics and the Conference Board's consumer confidence reading -- could shed more light on the state of the economic recovery.
Data on consumer confidence is slated for 10 a.m. EST (1500 GMT) on Tuesday. Private research group The Conference Board's index is seen slipping for a fifth straight month to 89.7 in October from 93.3 in September. Consumer confidence is particularly important to investors since consumer spending underpins about two-thirds of the nation's economy.
"A lot of the direction will depend upon the consumer confidence numbers," said Bill Strazzullo, market strategist with State Street Global Markets. "The consumer is the linchpin to the recovery. We will have a good sense later this morning on how confident the consumer is about the economy."
Equity futures pointed to a slightly lower open after stocks had slumped on Monday. S&P 500 futures for December lost 3.30 points to 888.50. Dow Jones industrial futures eased 33 points to 8,345, while Nasdaq 100 index futures for December eased 5 to 982. The Nasdaq 100 pre-market indicator eased 0.30 percent.
Dow component Procter & Gamble Co. (NYSE:PG - News) could offer some support to the blue-chip Dow in the early going. The consumer products giant before the open said quarterly profit rose as it has been helped by strong performance of products like Crest Spinbrush and its Actonel osteoporosis drug. Shares rose to $87.50 on Instinet after ending at $85.75.
In other corporate news, telephone company Qwest Communications International Inc. (NYSE:Q - News), which faces federal and criminal probes of its accounting, said on Monday after the close it may take charges of up to $40.8 billion to write down the value of its goodwill and network assets.
AOL Time Warner's (NYSE:AOL - News) chairman Steve Case has suggested to senior executives that the company could spin off its America Online unit, the Wall Street Journal reported in its online edition on Tuesday.
A spokesman for the company told the newspaper, "there are no plans to spin off AOL and there are no serious discussions to do so."
Tenet Healthcare Corp. (NYSE:THC - News), the No. 2 largest U.S. hospital chain, on Monday after the close reiterated its fiscal 2003 outlook that its earnings per share growth would exceed 25 percent.
Credit card issuer Providian Financial Corp. (NYSE:PVN - News) on Monday after the close reported lower quarterly profits as it saw the value of bad loans and uncollectable charges rise.
Omnicom Group (NYSE:OMC - News), the world's third-largest advertising company, said on Tuesday before the open its third-quarter earnings rose 11 percent boosted by domestic growth in the advertising sector.
Stocks had slumped on Monday, pulling back from a three-week rally, as investors worried this week's economic data could signal U.S. growth remains weak.
The Dow Jones industrial average (CBOT:^DJI - News) dropped 75.95 points, or 0.90 percent, to 8,368.04. The S&P 500 (CBOE:^SPX - News) slipped 7.42 points, or 0.83 percent, to 890.23. The technology-laced Nasdaq Composite Index (NasdaqSC:^IXIC - News) dropped 15.30 points, or 1.15 percent, to 1,315.83.
Support -- where buyers are expected to swoop in -- is at 1,280 for the Nasdaq, 8,200 for the Dow and 880 for the S&P 500, according to research firm Schaeffer's Investment Research. Resistance -- the point where sellers are likely to emerge -- is at 1,350 for the Nasdaq, 8,550 for the Dow and 910 for the S&P. The levels are key elements of technical analysis, which studies prices, volume and charts. |
