The market should go higher towards the end of the week if ORCL, accounting woes and additional casualties in the war against terrorism do not derail us. I do agree though it will be a real tug of war along the way. That's my opinion anyway. From Briefing.com:
6:58AM Oracle downgraded to Neutral by Merrill following warning (ORCL) 15.99: Merrill Lynch downgrades to near-term NEUTRAL from Buy following co's warning Friday evening in a "sparsely worded" press release. Merrill lowering its Q4 est. to $0.13 from $0.16 and FY03 est to $0.45 from $0.50. Firm believes ORCL shares could gap down to the $10-12 range, given the magnitude of the shortfall, and put pressure on the software group.
Stocks May Open Up; Oracle Could Weigh
By Haitham Haddadin
biz.yahoo.com
NEW YORK (Reuters) - Stocks are poised to open higher on Monday following a big rally in key overseas markets, but a profit warning from Oracle Corp. (NasdaqNM:ORCL - news) after Friday's close was expected to put a damper on the software sector.
No economic data was slated for release on Monday, but reports later this week include the Beige Book summary of U.S. economic conditions due Wednesday and the widely watched jobs report on Friday.
Equity-index futures were signaling a slightly higher open across the board for the broad market, the technology issues as well as blue chips. Standard & Poor's 500 (^SPX - news) futures were up 5.40 points at 1,137.90. The Nasdaq 100 contract gained 7.50 points to 1,444 and Dow futures added 60 points to 10,437.
``It looks like a firm open despite some tension around the globe,'' said Larry Wachtel, analyst at Prudential Securities, referring to escalating Palestinian-Israeli violence. ``The momentum from Friday's rally seems to carry forward.''
Stocks rallied on Friday, with the blue-chip Dow Jones industrial average (^DJI - news) chalking up a six-month high after upbeat data on manufacturing, construction and consumer spending raised hopes the U.S. economy and corporate profits will rebound soon.
A rosy business outlook from Novellus Systems Inc. (NasdaqNM:NVLS - news), a major producer of chip-making equipment, also helped. Novellus soared 14 percent and a sector rally ensued.
But on a less rosy note, shares of Oracle Corp. (NasdaqNM:ORCL - news) fell in after-hours trading Friday after the software giant warned that results will disappoint Wall Street. Prudential Securities on Monday cut Oracle's 12-month price target to $18 from $20.
Oracle shares fell to $14.79 in the aftermarket Friday vs. a close of $15.99 on the Nasdaq. Shares fell to $14.45 in trading ahead of the official market open on Monday.
Oracle was expected to put a damper on the software sector. But overall, the wider market may escape the damage, analysts said.
``I noticed that some of the software companies are trading lower in Europe this morning like BEA Systems (NasdaqNM:BEAS - news) so there might be some spillover there but it doesn't look like it will impact the entire Nasdaq,'' Wachtel said. ``The Nasdaq move on Friday was powerful enough that it can offset the Oracle news.''
Oracle, after the end of regular trade, said its fiscal third-quarter earnings will fall shy of analysts' expectations and software sales and operating income growth rates will be flat with the second quarter. The world's No. 2 software vendor blamed slow sales in Asia.
In other activity, Computer Associates International Inc.'s (NYSE:CA - news) shares fell after-hours after Moody's Investors Service cut the software company's long-term debt rating. Other tech stocks were basically flat.
Computer Associates fell to $16.50 late Friday from a close of $16.90 on the New York Stock Exchange. Moody's said after the end of the regular session that it cut the firm's senior unsecured debt rating to two notches above ``junk'' status.
The rating agency also expressed concern over the No. 4 worldwide software maker's ability to generate cash as it fights off government probes. The rating outlook has been changed to ``negative,'' Moody's said.
Standard & Poor's said it placed its corporate credit rating on Gateway Inc. (NYSE:GTW - news) on Credit Watch ``with negative implications'' after the recent dour outlook given by the personal computer firm for the year. Shares fell to $4.55 in the aftermarket from a close of $4.73.
On Friday, the Dow surged 262.73 points, or 2.6 percent, to 10,368.86 -- its strongest close since Aug. 27, 2001. The broader Standard & Poor's 500 Index (^SPX - news) rose 25.05 points, or 2.26 percent, to 1,131.78. The technology-laced Nasdaq Composite Index (^IXIC - news) pulled in a gain of 71.26 points, or 4.12 percent, to 1,802.75.
The Dow muscled right through a key technical ``resistance'' level at 10,300. A close above that level, technical analysts now believe, opens the way to tackle resistance at 10,400 to 10,500.
Resistance -- a level where sellers are likely to emerge -- is now set at 10,500 for the Dow, 1,850 for Nasdaq, and 1,132 for S&P, according to Schaeffersresearch.com.
Support -- where buyers are expected to swoop in -- is at 1,750 for Nasdaq, 10,200 for the Dow, and 1,120 for the S&P. The levels are key elements of technical analysis, which studies prices, volume and charts.
In other news, defense contractor Northrop Grumman Corp. (NYSE:NOC - news) on Sunday launched a hostile takeover bid for defense and auto parts company TRW Inc. (NYSE:TRW - news) after TRW's board rejected a friendly $6 billion offer.
TRW closed at $50.05 Friday and Northrop Grumman finished at $107.75.
General Growth Properties Inc. (NYSE:GGP - news) said it will acquire JP Realty Inc. (NYSE:JPR - news) for $1.1 billion including $440 million in cash, assumption of $460 million of existing debt and $116 million of existing preferred operating units. Shares of General Growth closed at $42.20 and JP Realty finished at $24.43. |
