Wall Street seeks inspiration from tech
By Susan Lerner, MarketWatch
Last Update: 4:53 AM ET June 4, 2005
<<NEW YORK (MarketWatch) - U.S. stocks are expected to trend higher in the coming week with investors hopeful that expected outlooks from Intel and other technology leaders will renew momentum on Wall Street.
"I think having that broad-based rally a couple weeks ago set the stage for this rally, which should last a couple more weeks and continue to challenge those new recovery highs," said Steve Goldman, chief market strategist at Weeden & Co.
After a strong May that saw the Nasdaq Composite Index ($COMPQ: news, chart, profile) put in its best one-month performance since October 2003, stocks hit a speed bump last week as crude-oil prices climbed back to $55.
The Dow Jones Industrial Average (DJIA: news, chart, profile) lost 0.8% on the week while the Nasdaq and the S&P 500 ($SPX: news, chart, profile) each slipped 0.2%.
"That [oil prices above $50 a barrel] can help keep the market in more of a consolidation rather than continuing this upward trend," said Barry Hyman, equity market strategist at Ehrenkrantz King Nussbaum.
The July crude contract rose 6.1% during the week to close Friday at $55.03 a barrel on the New York Mercantile Exchange. See Futures Movers.
Meanwhile, bond prices rallied with yields on the benchmark 10-year note ($TNX: news, chart, profile) skidding to 3.803% -- its lowest intraday level since March 2004. See Bond Report.
"They [bonds] might be vulnerable to profit taking but as afar as having a 40-50 basis point move in bond yields that'll sidetrack stocks I don't that's really in the cards at this juncture," said Weeden's Goldman.
Tech talk on tap
With the first-quarter reporting season largely over, Wall Street begins to turn its attention to the next quarter as Intel (INTC: news, chart, profile) and Texas Instruments Inc. (TXN: news, chart, profile) provide mid-quarter updates.
"The semiconductors have done well and have been leading the market," said EKN's Hyman. "We'd think that's going to be a key data point next week."
Heading into the updates, UBS and J.P. Morgan on Friday lifted their earnings and revenue forecasts for Intel with UBS moving up to earnings of 29 cents a share on $9.048 billion in revenue from 38 cents and $8.913 billion and J.P. Morgan moving up to 28 cents on sales of $9.05 billion from 27 cents and $8.9 billion.
Bear Stearns, meanwhile, boosted its view for TI to earnings of 28 cents a share from 27 cents and its gross margin estimate to 46.4% from 45.8%. The broker left its revenue forecast for the quarter unchanged at $3.12 billion.
Texas Instruments will provide its outlook on Tuesday while Intel releases its view on Thursday.
National Semiconductor (NSM: news, chart, profile) , meanwhile, will release its second quarter results on Thursday.
The average analyst forecast of analysts polled by Thomson First Call was for Nat. Semi. to post earnings of 22 cents a share on revenue of $465.53 million.
Other S&P 500 companies scheduled to report next week are Albertson's Inc. (ABS: news, chart, profile) , Toys R Us Inc. (TOY: news, chart, profile) , H&R Block Inc. (HRB: news, chart, profile) and Navistar International Corp. (NAV: news, chart, profile) - all of which will release their first quarter numbers.
Looking ahead to the second quarter, Thomson First Call research analyst John Butters said the earnings growth rate for the S&P 500 now stands at 6.7%, down slightly from 6.9% last week.
Data watch
On the heels of a heavy data week that culminated Friday with the much anticipated May employment report that surprised Wall Street with an unexpectedly weak addition of just 78,000 jobs, investors will have a relatively light load of data to assess next week.
Data on consumer credit will be released Tuesday while wholesale inventory numbers for April are due out Wednesday and Friday will see the release of the April trade deficit and the import price index.
EKN's Hyman thinks the trade number could be important since the market, in the past, has reacted in a very volatile manner to those numbers.
"We'd look for this number to be still rather a negative number showing our trade imbalance as a concern," Hyman said.>> |
