M O R N I N G .. S N A P S H O T -- U.S. stocks set for softer open
By Allen Wan, CBS.MarketWatch.com
Last Update: 8:47 AM ET Dec 19, 2001
NEW YORK (CBS.MW) -- Stocks are set to stumble out of the gate Wednesday after cell-phone maker Motorola (MOT) and aluminum giant Alcoa (AA) came out with earnings warnings that could be a harbinger of negative corporate surprises for the upcoming quarter.
Meanwhile, the U.S. trade deficit widened to $29.4 billion in October after perverse effects of the Sept. 11 attacks had reduced the gap to just $19 billion in September. Later on tap will be November leading economic indicators, which are seen rising 0.4 percent. Check economic calendar and forecasts.
March 2002 S&P futures were down 6.70 at 1,139.00, which is about 5 3/4-points below fair value, according to figures provided by HL Camp & Company.
Nasdaq 100 futures sank 22.00 to 1,643.00. The "triple Qs" (QQQ) , a tracking stock for the Nasdaq 100 Index ($NDX) , fell 54 cents, or 1.3 percent, to $40.72 in pre-open trading over the Redibook ECN.
After the market closed Tuesday, warned that its fourth-quarter profit will fall well short of most Wall Street expectations, while said it expected a bigger first-quarter loss and that it would cut 9,400 more employees from its payroll and shut more chip manufacturing plants over the next 12 months to try to become profitable as revenue falls short of expectations.
Also on the corporate front, shares of Citigroup were down in pre-market trade after the nation's largest financial services company said it will sell up to 20 percent of its Travelers Property Casualty unit in an initial public offering early next year.
The chip sector was looking particularly vulnerable following and Dataquest data showing that semiconductor revenues fell 33 percent this year - the worst industry decline in history.
Overseas, by the Motorola warnings, dragging down the overall market. In Asia, after the Bank of Japan to ease credit.
Tuesday's rally
The Dow Industrials is just points away from 10,000, but it may find that level elusive. On Tuesday, comforting words from General Electric and amazingly strong housing numbers stoked the Dow and the Nasdaq, which ened up above 2,000 for the first time in almost two weeks.
Solid gains in the networking and software sectors bolstered the tech sector from the onset while hardware stocks faltered after Solectron issued a profit warning.
For the broader market, a bullish tone emerged in the oil, oil service, utility, financial, chemical and cyclical sectors, with green lights flickering across the board. Check market stats and latest sector performance.
The Dow Jones Industrial Average ($INDU) ran up 106.42 points, or 1.1 percent, to 9,998.39 after ascending to a peak of 10,015 intraday. The blue-chip gauge's frontrunners included General Electric, Caterpillar, DuPont, Alcoa, Merck and Honeywell while AT&T, Hewlett-Packard, Intel, SBC Communications and Philip Morris edged lower.
The Nasdaq Composite ($COMPQ) gained 17.31 points, or 0.9 percent, to 2,004.76 while the Nasdaq 100 Index ($NDX) put on 17.34 points, or 1.1 percent, to 1,657.68.
One strategist expects the market to bide time for the next two weeks before the fourth-quarter earnings season begins in earnest in January.
"The market continues to digest its huge run. We've been in a sort of grace period and the market has great expectations built in. But we'll be in potentially rocky territory over the next four week," observed Peter Boockvar, equity strategist at Miller Tabak & Co., referring to the looming pre-announcement season, which kicks into full gear in early January.
"We'll need decent corporate news to sustain the market," Boockvar said, noting that economic data will also be put under a microscope as investors scour for clear signs of the rebound that has been priced into shares.
The Standard & Poor's 500 Index ($SPX) sprinted 0.8 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks ascended 1.2 percent.
Volume came in at 1.33 billion on the NYSE and at 1.88 million on the Nasdaq Stock Market. Market breadth was positive, with advancers taking out decliners by 20 to 12 on the NYSE and by 21 to 16 on the Nasdaq.
Read for trading after the closing bell.
Merrill fund managers bullish
In a fund manager survey released on Tuesday, Merrill Lynch revealed that portfolio managers are convinced the global economy had turned the corner and is set to improve in the coming year.
Earnings, they believe, will grow only 6 percent over the next year and pricing power among companies will remain "elusive."
While appetite for risk has increased and cash levels have diminished, a third of the panel in Merrill's survey remains overweight cash.
The panel believes global equities are fairly priced and thinks U.S. stocks have the best prospects for a recovery in corporate profits and are also perceived to have the highest quality earnings stream. Still, U.S. stocks are seen as the most overvalued on a relative basis.
Fund managers continue to shift away from defensive areas and into more economically-sensitive areas of the market.
-------------------------------------------------------------------------------- |
