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

To: Dealer who wrote (24906)	12/14/2000 9:20:32 AM
From: Dealer	Respond to of 65232

M A R K R T ... S N A P S H O T Financials to pressure broad market Chase-J.P. Morgan warn; PPI up 0.1% By Julie Rannazzisi, CBS.MarketWatch.com Last Update: 9:07 AM ET Dec 14, 2000 NEW YORK (CBS.MW) - A profit warning from merger partners Chase Manhattan and J.P. Morgan, may put a damper on the broad market Thursday. In the meantime, a benign wholesale inflation report did little to lift spirits. The producer price index edged up 0.1 percent overall vs. expectations for a 0.2 percent rise. And the core rate, which excludes food and energy components, came in at flat levels compared to an expected 0.1 percent increase. But markets barely batted an eye. With the election uncertainty now removed as Republican candidate George W. Bush has emerged the victor, investors' full attention will fall on the string of warnings revealed each day during this unforgiving pre-announcement period. March S&P 500 futures fell 3.80 points, or 0.3 percent, and were trading roughly 7.5 points below fair value, according to HL Camp & Co. Nasdaq futures, meanwhile, added 3.00 points, or 0.1 percent, erasing earlier losses. Chase Manhattan (CMB) and J.P. Morgan (JPM) informed investors Thursday that its fourth-quarter earnings and those of J.P. Morgan will be "substantially lower" due to a difficult capital markets environment and higher expenses. But despite deterioration in the external credit environment, the companies said their credit portfolios are performing relatively well. Total trading revenues for both firms are expected to be down from the previous year due to the challenging market environment, including a decline in customer volumes and wider credit spreads. Further, one-time costs in connection with the merger have increased by $400 million, the companies said. Last week, Bank of America said it wouldn't make its quarterly numbers due to higher credit costs and slower capital markets activity. With the U.S. economy slowing and corporate profits slumping, many banks are now faced with deteriorating credit portfolios. Moody's Investors Service observed in a report Wednesday that the default risk of North American publicly-held companies stabilized at record-high levels in November. The high level of default risk was attributed by the rating agency to greater leverage -- often brought about by debt-funded merger and acquisition activity - as well as higher costs for credit, energy, and labor. J.P. Morgan slipped $13.25, or 8.1 percent, to $151 in Instinet pre-market dealings while Chase fell $3.87 to $40.63. In other corporate news, Corning (GLW) said it will meet the high end of its range for previously stated guidance in the fourth quarter -- which it will reveal at its annual investors conference Thursday. Corning said all of its high-growth businesses are turning in excellent performances with year-over-year optical fiber volume growth seen in the 30 to 35 percent range in the fourth quarter. Corning said it'll also reiterate profit forecasts for 2001 at its conference. Shares gained $1.50 to $74 in Instinet. Separately, Trim Tabs said Tuesday witnessed a whopping $10.7 billion equity inflow - the third largest one-day infusion. And the $20 billion inflow on Monday and Tuesday was a record. Further, Trim Tabs points to a surge in stock buybacks as another positive. In the Treasury market, prices edged higher on expected weakness in the stock arena as well as a benign reading on wholesale inflation. The 10-year Treasury note gained 11/32 to yield ($TNX) 5.21 percent while the 30-year government bond gained 13/32 to yield ($TYX) 5.45 percent. In other economic news, weekly initial claims fell 32,000 to 320,000. And business inventories rose 0.6 percent in November. View Economic Preview, economic calendar and forecasts and historical economic data. Cornering the currency market, dollar/yen extended gains, adding 0.2 percent to 112.63 while euro/dollar swelled 0.8percent to 0.8838