By Amy Collins
NEW YORK, Nov 7 (Reuters) - Only a week after Microsoft
Corp. <MSFT.O> joined the Dow 30, analysts are wondering
whether the wounded software giant will become an albatross
around the neck of Wall Street's emerging rally.
In a massive anti-trust case, a U.S. federal judge said the
world's largest software company used its monopoly power to
punish competitors and had done consumers harm.
"Clearly, this is a severe blow to Microsoft. And as of
last week, it's in the Dow (Jones Industrial average) so it
will play out with a real negative tone in the early goings,"
Arthur Hogan, chief market analyst at Jefferies & Co. said
shortly after the judge's ruling was released.
"I think upon appeal it may not be as harmful to Microsoft
at the end of day as it appears, but it's clearly disappointing
and it will set a negative tone to the market."
Some analysts said a detrimental Microsoft decision may
already be priced into the company's stock.
"I think Microsoft all along felt that the ruling was quite
likely to go this way with this judge, and the Street has been
girding for it for a year," said Arnold Berman, a technology
strategist at Soundview Technology Group Inc. in Stamford Conn.
"Microsoft stock, in a week where the Nasdaq broke 3,000
for the first time, has been acting decidedly tired in
anticipation of this," he said.
How widely the decision will ripple through the market
remains to be seen.
"I think the stock market in the last several months has
moved not because of Microsoft, but in spite of it," said Arnie
Owen, managing director of capital markets at Cruttenden Roth.
"One of things that's going on is the change of leadership.
We've gone away from box makers and chip makers. We've gone
into telecom and fiber optics."
The market continued its rally Friday after the October
payroll data gave more confidence to analysts who believe the
Federal Reserve is less likely to raise interest rates at its
Nov. 16 policy setting meeting.
"We think the market should continue this momentum in light
that strong economic growth is not translating into higher
inflation," Alan Skrainka, chief market strategist at Edward
Jones in St. Louis.
A new Reuters poll Friday showed that the top Wall Street
brokerages were divided over whether the Fed will raise
interest rates Nov. 16, a shift away from confidence a week
earlier that a hike was imminent.
The survey found that 16 of 30 primary dealers of U.S.
government securities expect no rate change, 12 foresee a rise
and two said it was too close to call. A week earlier, 18 were
predicting a raise on Nov. 16.
The important economic data this week is Wednesday's
producer price index, a measure of wholesale prices, and third
quarter productivity data and unit labor costs Friday.
The Dow Jones industrial average <.DJI> Friday closed 64.84
points higher, or 0.61 percent, at 10,704.48. The broad
Standard and Poor's 500 index <.SPX> ended up 7.59 points, or
0.56 percent, at 1,370.23.
The Dow, which ended its first week with four new
components, closed down 25 points for the week. The two prior
weeks showed a gain of 710 points, which erased the highest
one-week point loss ever, of 630 points, for the week ended
Oct. 15.
The new components to the Dow are Microsoft, Intel Corp.
<INTC.O>, SBC Communications Inc. <SBC.N> and Home Depot Inc.
<HD.N>.
The Nasdaq composite index <.IXIC> was up 46.34 points, or
1.52 percent to 3,102.29 Friday, and up 135 points for the week
with six consecutive all-time high closes on the strength of
technology shares.
Breadth has been strong in heavy volume on the Big Board
and Nasdaq, giving analysts reason to put more credence in the
rally.
"It's one way to measure whether there's real investment
demand behind the move. Is the fire power there?" said Gregory
Nie, a technical analyst at First Union Securities Inc. in
Chicago. "We're very close to getting back into sync."
Although the bulk of third-quarter earnings are out of the
way, a handful of big technology and retailing companies are on
tap this week.
Cisco Systems Inc. <CSCO.O>, Dell Computer Corp. <DELL.O>,
Wal-Mart Stores Inc. <WMT.N>, May Department Stores Co.
<MAY.N>, Federated Department Stores Inc. <FD.N>, Gap Inc.
<GPS.N>, Intimate Brands Inc. <IBI.N> and Abercrombie & Fitch
Co. <ANF.N> are all expected to report this week, according to
First Call/Thomson Financial.
((Wall Street Newsdesk +212 859 1730)) |
