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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Dealer who wrote (5164)	10/3/2000 8:22:13 AM
From: Dealer	Respond to of 65232

<FONT COLOR=GREEN>U.S. stocks seen rising at open, Fed meeting looms By Denise Duclaux NEW YORK, Oct 3 (Reuters) - U.S. stocks were seen climbing at the open of trading on Tuesday after a harsh sell-off in the Nasdaq, but a meeting of Federal Reserve policy makers coupled with a quarterly earnings warning from Xerox Corp. threaten to cap gains. ``The market is in a little bit desperate shape, we are getting no catalyst to the upside,'' said Barry Hyman, chief investment strategist at Weatherly Securities. ``I would look for the open to be stronger with bargain hunters coming into the semiconductor sector. But it will be a very volatile day.'' Global sales of semiconductors grew 53 percent to record levels during August, driven by strong Asia-Pacific region growth and booming demand for Internet and communications devices, according to the Semiconductor Industry Association. The report follows rockiness in chip stocks amid fears the semiconductor cycle had hit its peak. But the U.S Federal Reserve policy meeting will grab the spotlight. Wall Street is virtually certain Fed officials will stand pat on interest rates, but will want to see if policy makers still rank inflation risks over the risk of further, possibly sharper, economic slowing. With more than an hour to go to the opening bell, Nasdaq 100 index futures were up 58.50 points at 3,587 while S&P 500 index futures were trading at 1,462.10, up 5.90 points. The latest in a string of quarterly earnings warnings will also keep Wall Street on guard. Xerox (NYSE:XRX - news) warned it will likely to post a third-quarter loss instead of a profit, citing weak revenues in North America and Europe, fierce competition and unfavourable foreign-exchange rates. Xerox ended Monday up 1/4 at $15-5/16 on the New York Stock Exchange but was trading at 12-5/8 before the bell on Instinet. ``It's a warning on top of a warning on top of warning,'' Hyman said. ``Xerox is a damaged company at this point, whatever could have gone wrong has gone wrong. Now they are not even making any money.'' The slower pace of U.S. economic growth and sky-high energy prices, as well as the U.S. dollar's persistent strength against Europe's single currency, the euro, have set off alarm bells because of their potential to crimp profits. Market players will closely examine the accompanying statement issued by the policy-setting Federal Open Market Committee (FOMC) for any clues on the state of the economy. A Reuters poll last week found all 29 of the primary dealers that trade directly with the Fed in fixed income markets expect the central bank to leave the overnight bank lending unchanged at 6.50 percent. The FOMC will make its announcement on Tuesday at about 2:15 p.m. (1815 GMT) at the close of its meeting. Tuesday's meeting is the final scheduled meeting before the Nov. 7 U.S. presidential election. Fed officials tend to steer clear of politics and are likely to want to keep a low profile by keeping rates on hold this time around. Also on the calendar, the U.S. Commerce Department's release this week of data on U.S. sales of new homes for the month of August should show a modest decline, economists said. In a Reuters survey, 11 U.S. economists forecast on average a dip to 898,000 units on an annualized basis from July's 944,000 units. European bourses were broadly higher midday Tuesday as the technology sector reversed initial losses but trade was subdued with Germany closed for a public holiday and overnight weakness in the U.S. dampening the tone. On Monday, technology stocks had tumbled as anxieties over declining profit growth plagued the sector in the aftermath of Apple Computer Inc.'s (NasdaqNM:AAPL - news) warning of lower-than-expected profits late last week. But blue chip shares rose, bolstered in large part by computer giant International Business Machines Corp. (NYSE:IBM - news) and financial services heavyweight J.P. Morgan & Co. (NYSE:JPM - news). The Nasdaq Composite Index (^IXIC - news) fell 103.92 points, or 2.83 percent, to 3,568.90. The blue-chip Dow Jones industrial average (^DJI - news), meanwhile, finished the session up 49.21 points, or 0.46 percent, at 10,700.13. The broader Standard & Poor's 500 Index (^SPX - news) fell a mere 0.28 of a point, or 0.02 percent, to end at 1,436.23.