TECH STOCKS--Techs Seen Bouncing at Open
Audio/Video
Reuters Market Report with Conway Gittens for September 6.
By Haitham Haddadin
NEW YORK (Reuters) - U.S. stocks were seen opening mixed on Thursday, with the technology sector bouncing as investors pick key shares from the bargain basement after the sector's mauling on Wednesday.
But analysts warned of some pockets of weakness, like semiconductors, and also expected some pressure on blue chips after DuPont Co. (NYSE:DD - news), the biggest U.S. chemical company, said early on Thursday its 2000 earnings per share (EPS) would fall short of Wall Street forecasts.
``I think we will bounce nicely across the board but probably with some weakness in the basic materials stocks,'' said Arthur Hogan, chief market analyst at Jefferies & Co.
But he said that on the good news front, technology stocks have been oversold on the back of a weak semiconductor sector.
Wednesday's sell-off followed recent negative comments on technology companies, especially computer chip makers, from analysts. That spooked the market, spurring investors to cash in on strong gains in the sector made over the past month.
``The rest of the (high-technology) group looks like it is in bargain territory,'' Hogan said. ``On bargain hunting we'll probably buy tech and telecom this morning.''
Investors may be particularly interested in telecommunications company stocks after a newspaper report that AT&T Wireless (NYSE:AWE - news) is planning to discuss a combination with Nextel Communications Inc. (NasdaqNM:NXTL - news), among other strategic options, at a board meeting later this month.
The Wall Street Journal said in its electronic edition on Thursday that people familiar with the situation said AT&T Wireless is expected to present the Nextel idea, among other proposals, to the AT&T (NYSE:T - news) board at a strategy session later this month at the company's headquarters in New Jersey.
With more than an hour to go to the opening, Nasdaq 100 index futures for September were trading 18.00 points up at 3,875.00 while the September S&P 500 index futures were up 4.40 points at 1,498.40.
Analysts said they saw some pressure on the stocks of basic materials after the shares of DuPont, a component of the Dow Jones industrial average (^DJI - news) grouping 30 leading companies, was down at $43 on the Instinet electronic broker system from a Wednesday closing price of $47.
DuPont said it cut its 2000 EPS estimate to $2.85 to $2.95 before items. Wall Street analysts had forecast earnings of $3.01 a share, according to research firm First Call/Thomson Financial.
DuPont blamed increases in energy and raw materials costs for the shortfall, but said it was confident it would post underlying EPS growth of more than 10 percent next year.
Blue-chip shares had eked out a modest gain during Wednesday's session, lifted in large part by J.P. Morgan (NYSE:JPM - news), which rose to a record high on speculation it could be the subject of a takeover bid.
While the Nasdaq Composite Index (^IXIC - news) fell 129.84 points, or 3.13 percent, to end at 4,013.34, the Dow Industrial Average (.DJI) rose 50.03 points, or 0.44 percent, to 11,310.64.
The Standard & Poor's 500 index (^SPX - news), a broader measure of the market, finished down 14.83 points, or 0.98 percent, at 1,492.25 on Wednesday.
Traders will be also awaiting some fresh economic data Thursday morning, including the jobless claims data for last week from the Department of Labor, due at 8.30 a.m. EDT (1230 GMT).
Recent economic reports boosted market sentiment as they showed signs that the U.S. economy's stellar growth rate was slowing, which in turn strengthened the consensus view that the U.S. Federal Reserve may hold off on raising rates for now.
William McDonough, president of the Federal Reserve Bank of New York said on Wednesday the U.S. economy may be slowing down but to a rate that remains quite robust.
He said the economy may be cooling down to a rate of growth of about 4 percent. During the second quarter of 2000, the U.S. economy grew at an annualized rate of 5.2 percent.
Traders are also eyeing oil stocks which rose Thursday as oil prices in the United States pushed to fresh 10-year highs, shooting up to over $35 a barrel at one point in Wednesday's aftermarket.
In company-specific news, upscale retailer Nordstrom Inc. (NYSE:JWN - news) said on Thursday sales at stores open at least one year were down 6 percent in August. Nordstrom shares closed at $18-11/16.
IVAX Corp (AMEX:IVX - news) said a California federal judge issued a ruling Wednesday that could allow the Miami firm to soon begin selling a generic version of Bristol-Myers Squibb Co.'s (NYSE:BMY - news) blockbuster cancer drug, Taxol. Ivax shares closed at $38, up $6-13/16, before making the announcement, while Bristol-Myers finished at $50-3/4, off $2-7/16. |
