Bridge News New York--Apr 14--US stocks are seen under pressure on
the open as investors scramble to meet margin calls that went out amid Friday's
cascade of selling, mostly in the technology arena. Some traders expect an
attempt at a rally in late morning, but its success is far from certain.
* * * Equities futures wound up with a negative bias. S&P 500 futures closed
down 88, or 6.04%, at 1367 in Chicago trade, or 3 points below fair value,
indicating a moderate bearish bent on the close. Nasdaq 100 futures tumbled 355,
or 9.9%, to 3217. Fair value is at 3240. US Jun Treasury bonds traded higher by
7/32 to 98 15/32 as investors fled stocks and sought a haven in government
issues. The yield on the 30-year cash bond fell to 5.78%, while the rate on the
10-year note was off 0.06 at 5.87% despite a sharper rise in inflation witnessed
in Friday's report on March consumer prices. The Nasdaq faces a critical support
level near 3000 where buyers have been plentiful in the past year. The composite
index plunged 355.51, or 9.67%, to 3321.27 in its biggest point drop and second
largest percentage decline in history. The index closed off 25% on the week. "We
could easily see risk down to the 3000 to 3100 level," said Greg Nie, a
technical analyst at First Union Securities. "I think we'll test near that
level, but I think we'll hold," said Michael Lyons, a trader at Morgan Stanley
Dean Witter. Lyons expects another bout of selling Monday morning as investors
weigh the market's risk over the weekend. "We're not going to forget this week
easily," he said. "I think there's selling to come. There's fear out there now."
There was not a lot of evidence that big mutual funds and pension funds were
dumping stocks, but there was a clear lack of buyers, traders said. But there is
cash being raised that could come in once the selling subsides, Lyons said.
Although a sell-off in Asia is seen Monday morning, overseas markets have tended
to react a little less to the drop in technology stocks, traders said. A bigger
reaction is seen in Europe, they said. So far, the prospect of good first
quarter earnings has done little to prop up the overall market, but it has been
supportive of the individual companies. Among companies expected to report
earnings are Bank of New York (BK), BankAmerica (BAC), Eastman Kodak (EK), Ford
(F), Novellus Systems (NVLS), Sears (S) and Texas Instruments (TXN). The Dow
also posted its biggest point decline ever, falling 617.78, or 5.66%, to
10,305.77. Volume on the NYSE was heavy at 1.26 billion shares. Declines bulled
over advances 6 to 1. The Nasdaq 100, which contains most of the big technology
issues, careened down 345.85, or 9.73%, to 3207.96. Volume on the Nasdaq topped
2.4 billion shares as losers s mashed winners nearly 8 to 1. The broadly based
Wilshire 5000 dove 860.30, or 6.45%, to 12,475.14. Non-block money flow out of
listed stocks, a measure of short-term market sentiment, was a solidly bearish
$522.7 million. Among NYSE issues, funds fled most out of Nokia, Motorola and
Chase Manhattan. Funds flowed into General Electric, Pfizer and Qwest
Communications. Leading the market lower were biotechnology, Internet,
semiconductors, brokerage firms, software and networking issues. |
