LONDON, April 30 (Reuters) - The Dow was seen advancing further into record territory on Friday, as bouncing Internet stocks in London pointed to a recovery in the technology-heavy Nasdaq after Thursday's sell-off.
By 1038 GMT, the Globex S&P June future contract climbed eight points to 1,355.4, with fair value estimated at 1,349.12, pointing to an opening gain of some 60 points for the Dow.
Internet stocks, which were battered on Thursday after Amazon.com Inc (AMZN - news) warned of deepening losses in coming quarters, moved higher across the board in London.
Amazon traded at $147, after slumping $25-1/4 or 13 percent to $168-/14 overnight in New York.
America Online (AOL - news) traded at $147, up some six dollars form its New York closing level. CMGI Inc (CMGI - news) and Ebay Inc. (EBAY - news) were also higher, trading respectively at $253 and $215-5/8 in London.
Strategists, however, warned that the current sector rotation - out of high-flying technology stocks and into cyclical plays - was likely to continue and may be the prelude to a correction in blue-chip stocks. ''There is a tug of war going on between professional (longer-term) investors, who are selling off the hi-tech names, and intraday traders who are buying on the dips,'' said HSBC Securities global strategist Richard Batty.
''The switch into economically sensitive stocks is based on expectations of stronger global economic growth this year and even higher growth in 2000. Yet it could be indicative of equity markets falling sometime in the future - if people get out of big caps and buy small cyclical plays, the whole market is likely to go down,'' Batty said.
Traders also expected to see more volatility on the Nasdaq, which has fallen in each of the past three sessions since it scored a record closing high on Monday, giving it 1999 gains of more than 20 percent.
''It's been the same story throughout the earnings period and especially after the Compaq's (CPQ - news) warning two weeks ago. If these technology stocks don't blast away expectations, they get sold off,'' said one.
On Thursday, the Nasdaq slipped 21.3 points or 0.83 percent at 2,529.11. By contrast, the Dow set a third straight record close at 10,878.38, up 0.3 percent from the previous day.
Elsewhere, further clues on the state of the U.S. economy were expected with the release of key first quarter gross domestic product numbers at 1330 GMT. A Reuters poll of economists forecast a 3.3 percent rise in GDP compared with a 6.0 percent rise in the previous quarter.
Meanwhile, dealers said Deere & Co. (DE - news), a large farm equipment maker, would be a likely decliner after the company warned late on Thursday that it expected worldwide equipment sales volume for its second quarter to be about 20 percent lower below the same period last year.
|
