MARKET VIEW--APRIL 10--Steady open in store for U.S. shares
Earnings in focus
By Emily Church and Julie Rannazzisi, CBS MarketWatch
Last Update: 7:53 AM ET Apr 10, 2000 Market Pulse
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NEW YORK (CBS.MW) -- The equity market is set for an open on the steady side Monday with the futures market pointing to some strength in the futures markets.
June S&P 500 futures rose 3.00 points, or 0.2 percent, but were trading about 0.70 point above fair value, according to HL Camp & Co. Nasdaq futures added 40.70 points, or 0.9 percent.
In the bond market, prices were a touch higher across the board.
The 10-year Treasury note inched up 6/32 to yield 5.83 percent and the 30-year bond added 10/32 to yield 5.71 percent.
There are no economic releases on tap for Monday in a week with a spate of key numbers on tap Thursday and Friday. View economic calendar and forecasts and historical economic data.
In currency markets, dollar/yen was recently trading at 106.28, up 0.9 percent from the previous close, while euro/dollar added 0.3 percent to 0.9570.
The outlook
Nasdaq's 4.2 percent spike on Friday on strong momentum in Dell, Cisco and Intel led investors down memory lane to the days when the familiar technology names set the market's direction.
Even Microsoft (MSFT: news, msgs) delivered on Friday, rising 3 1/16 to 89 1/16 after triggering one wild week after the software giant was found liable for antitrust violations.
Trouble is, some strategists aren't sure that the enthusiasm is going to hold. A market-friendly March employment report Friday pushed buyers off the sidelines, but more key inflation data in the week ahead could work the other way.
The gains among the tech leaders represented a "flight back to the names people know and love. What we're not seeing is whether it's sustainable," said Brian Piskorowski, market analyst at Prudential Securities. "We're in a backing and filling stage here."
Volumes were relatively light on Friday, making it difficult to discern a prominent trend in the day's action. Volume on the Big Board came in at 897 million shares and at 1.56 billion on the Nasdaq stock market.
Concerns about valuations haven't subsided, but attention is likely shift to first-quarter results in the new week. Expectations are that profits growth in the S&P 500 stocks will surpass the strong December quarter performance.
The Nasdaq Composite rose 178.89 points to 4,446.45. The index is down 2.8 percent for the week, having recovered most of the ground in lost on the Microsoft ruling.
The Dow Industrials slipped 2.79 points to 11,111.48, dragged by a 4.2 percent drop in Alcoa (AA: news, msgs) as a Deutsche Bank analyst changed profit forecasts for the aluminum giant. Weakness in the index's energy and financial components, like J.P. Morgan (JPM: news, msgs) hurt as well. For the week, the Industrials are up 1.7 percent.
With volatility ($VIX: news, msgs) coming off extreme highs on Tuesday and Wednesday, Chicago derivatives trader Jim Conners at DH Financial said he was expecting the market to seek equilibrium. The highs in the index this week suggested that stocks touched or were very near a bottom this week, he said.
Upcoming events
Monday: No releases. Tuesday: No releases. Wednesday: March import and export price indexes. Thursday: March retail sales, March producer price index, weekly initial claims. Friday: March consumer price index, February business inventories, March industrial production and capacity utilization.
Earnings watch
The new week will mark the start of the first-quarter earnings reporting season. Three Dow Industrials companies are on tap, First Call notes, and markets bellwether General Electric could report as soon as Thursday.
While the analysts are currently expecting an average 18.8 percent growth in S&P 500 stocks earnings over the year-ago period, First Call expects the growth might come in at at least 22 percent. Pre-announcements for the first quarter moreover are running less negative than normal.
Among companies expected to report March results:
Monday: Motorola, Consolidated Paper
Tuesday: Harley-Davidson, Best Foods, SunTrust Banks, International Paper, Abbott Labs.
Wednesday: Ariba, E-Trade, Check Point Software, Advanced Micro Devices, Rambus, Seagate, Time Warner, JP Morgan, Enron and Genetech.
Thursday: Ameritrade, Sun Microsystems, Gateway, General Motors, New York Times, Safeway, First Union, Fleet Boston Financial, Guidant.
Friday: Tribune, Global Marine and Boise Cascade.
Weekly recap
Monday: The Nasdaq suffered its largest point decrease in history and its fifth largest percentage drop as a tumble in Microsoft shares unleashed a wave of selling in the tech arena. Dow tacks on 300.01 points to 11,221.93, Nasdaq plummets 349.15 points to 4,223.68.
Tuesday: Wall Street witnessed its most violent price swings in history, leaving market participants gasping for air. Dow falls 57.09 points to 11,164.84 while Nasdaq drops 74.79 points to 4,148.89.
Wednesday: The Nasdaq ended mildly higher as buyers surfaced in many of the recently hard-hit areas of the market, such as chip and biotech. Dow loses 130.92 points to 11,033.92, Nasdaq adds 20.33 points to 4,169.22.
Thursday: The major averages staged a nice rebound, led by the tech sector, in a calm trading session that encouraged buyers to step up to the plate. Dow gains 80.35 points to 11,114.27, Nasdaq tacks on 98.34 points to 4,267.56.
Friday's trading activity
News that the unemployment rate was unchanged in March at 4.1 percent sparked a rally in Internet, networking and software stocks. The smart march in relatively light volume was "a continuation of technical bounce that started Thursday," said Ned Collins, head of trading at Daiwa Securities.
The Standard & Poor's 500 Index advanced 1 percent, while the Russell 2000 Index of small-capitalization stocks jumped 2 percent.
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The U.S. economy added 416,000 new jobs, the Labor Department said Friday. Excluding temporary census workers, 299,000 jobs were added. The March figures were almost exactly in line with expectations of Wall Street economists surveyed by CBS.MarketWatch.com. See full story.
Telecom stocks moved higher off gains in Europe inspired by a strong first-quarter preview from French equipment maker Alcatel (ALA: news, msgs). Newbridge Networks' (NN: news, msgs) strong quarterly revenue outlook late Thursday added support. Each were 10 percent gainers on the day.
Celera (CRA: news, msgs) shares slipped 13 to 130, reversing a heady climb on Thursday on its earlier-than-expected progress in mapping the human genome. The Amex Biotech Index ($BTK: news, msgs) posted 1.1 percent gain after Affymetrix (AFFX: news, msgs) dropped 8 percent on a negative British court judgement.
Healtheon/WebMD (HLTH: news, msgs) shares gained over 34 percent after the online health technology specialist issued an outlook for its first-quarter financial results and said two of its directors want to buy as much as $220 million in stock. See full story.
Bonds were higher, taking courage from expectations built in the jobs report that the Federal Reserve won't up its near-term rate-tightening schedule. See Bond Report.
The benchmark 10-year Treasury note rose 19/32, yielding 5.86 percent. The 5-year was 5/32 higher to yield 6.19 percent and the 2-year, which is most sensitive to Fed tightenings, shed 3/32 to yield 6.37 percent.
In the commodity arena, May crude fell 65 cents to $25.04, while the Bridge CRB index was off 0.4 percent. See Futures Movers and latest commodity prices.
Emily Church is the New York bureau chief for CBS MarketWatch.
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