Stocks Set to Dip on Techs; IBM May Help
1 hour, 21 minutes ago
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Technology stocks are set to take a hit when the market opens on Thursday after healthy earnings reports from tech bellwethers like Intel Corp. (Nasdaq:INTC - news) proved not enough to please investors with lofty expectations.
Losses may be tempered by International Business Machines Corp. (NYSE:IBM - news), which rose in after-hours trading after it brought forward its quarterly earnings announcement to Thursday morning from next week. Analysts expect higher revenues, boosted by the weaker dollar.
Intel Corp. (INTC.O), the world's largest microchip producer, reported a strong rise in revenues and expectation-topping earnings late on Wednesday. But it also forecast a drop in revenues for the first quarter, and its shares fell 3 percent after hours.
Internet search engine Yahoo! (Nasdaq:YHOO - news) slumped more than 3 percent after the close despite reporting a rise in its quarterly net profit, fueled by its purchase of Web search advertising provider Overture Services Inc.
Apple Computer Inc. (Nasdaq:AAPL - news) fell 5 percent, even after reporting a strong profit, a turnaround from a year-ago net loss, and saying its second-quarter earnings will beat estimates.
The Nasdaq-100 After Hours Indicator was down 0.4 percent, pointing to a weaker start for the technology sector on Thursday. Futures were also weaker, with Nasdaq 100 March futures down 15 points at 1,522.50, and Standard & Poor's 500 March futures were down 4.10 points at 1,127.20.
"Even though the numbers are coming in pretty strong, it may be hard for the market to sustain a rally to new multiples," said John Davidson, president and CEO at PartnerRe Asset Management. "We've had a strong run to a pretty high level of (price-to-earnings) ratios."
IBM's stock jumped 1.5 percent to $91.65 in after-hours trading on Instinet from its NYSE close at $90.31, after the company said it would release earnings early Thursday morning. The news is expected around 7:30 a.m. EST. IBM's earnings originally were set for release on Jan. 20.
Mergers were also on traders' minds after J.P. Morgan Chase & Co. Inc. (NYSE:JPM - news) said it has agreed to buy Bank One Corp. (NYSE:ONE - news) for about $58 billion,.
Stocks had ended the regular trading session higher on Wednesday as investors latched onto encouraging economic news and bet on a solid fourth-quarter earnings period.
Investors nibbled at wireless carriers and blue-chip names, although Wall Street remained on watch for key financial results due from the technology sector after the close.
The market embarked on a late-day rally after a Federal Reserve (news - web sites) report showed the U.S. economy remained on track for a recovery in recent months. Earlier, tame inflation data bolstered expectations the central bank will keep interest rates low for some time, allowing the economy to heal.
The Dow Jones industrial average (^DJI - news) climbed 111.19 points, or 1.07 percent, to 10,538.37, and the broader Standard & Poor's 500 Index (^SPX - news) advanced 9.30 points, or 0.83 percent, to 1,130.52. The technology-laced Nasdaq Composite Index (^IXIC - news) gained 14.69 points, or 0.70 percent, to 2,111.13.
Trading was active with 1.5 billion shares changing hands on the New York Stock Exchange (news - web sites) and 2.1 billion traded on Nasdaq.
Shares of AT&T Wireless Services Inc. (NYSE:AWE - news) rose after sources familiar with the situation said on Wednesday that Cingular Wireless's interest in acquiring AT&T Wireless has intensified and it has the backing of its two parent companies to fund a purchase. Its stock rose $1.44, or 17 percent, to $9.99.
Sprint PCS Group (NYSE:PCS - news) rose 86 cents, or 14 percent, to $7.05. The American Stock Exchange's North American Telecommunications Index (^XTC - news) rose 1.7 percent.
Alaris Medical Systems (NYSE:AMI - news), a maker of medication safety and delivery devices, said on Wednesday it expects earnings to rise as much as 61 percent in 2004. Alaris rose $2.82, or 18 percent, to $18.56.
Delta Air Lines (NYSE:DAL - news) reported a narrower fourth-quarter net loss as revenues edged higher and it cut costs. Delta shares ticked up 1 cent to $12.15.
In the latest economic news, the U.S. trade deficit narrowed unexpectedly in November to $38.0 billion, the smallest gap in 13 months, as civilian aircraft sales pushed exports to their highest level in three years, the U.S. Commerce Department (news - web sites) said on Wednesday.
A sharp rise in energy prices helped push up U.S. wholesale prices in December, but, excluding volatile food and energy costs, core producer prices posted a surprise drop, a Labor Department (news - web sites) report on Wednesday showed. (Additional reporting by Bill Rigby) |
