Chip weakness, GE weigh on pre-open
Yahoo bucks trend amid Merrill Lynch upgrade
By Emily Church, CBS.MarketWatch.com
Last Update: 8:39 AM ET Aug. 29, 2002
marketwatch.com
LONDON (CBS.MW) -- U.S. bellwether stocks were walking down with the main European indices in Thursday's pre-open as negative analyst comments on the semiconductor sector helped prolong bearish sentiment on the sector.
An earnings estimate cut for market bellwether General Electric didn't help matters.
Stock futures took a slight turn for the worse after the Commerce Department left second quarter economic growth unrevised at 1.1 percent, while economists surveyed by CBS MarketWatch.com had been looking for a slight increase to 1.2 percent. Also, initial jobless claims rose by 8,000 in the latest week to 403,000.
Meanwhile, Yahoo (YHOO: news, chart, profile) bucked the trend, rising 49 cents, or 5.4 percent to $9.62. Pre-open volume as of 8:35 a.m. was roughly 508,000 shares.
The stock dropped 15 percent Wednesday to $9.13 amid reports that Japanese Internet investor Softbank was selling its shares in the U.S. media-portal stock.
On Thursday, Softbank confirmed its stake in Yahoo will fall to 9 percent from 14 percent. It made $270 million from the sale. See more
Merrill Lynch upgraded Yahoo to a 'neutral' from a 'sell' after the sell-off on Wednesday. The broker said it expected Yahoo to remain range bound in the $10 area.
Chip-related stocks were bearing the brunt of the early weakness following cautionary comments on the group from brokers. UBS Warburg downgraded several chip equipment makers, saying that order momentum in the industry had begun declining amid a lackluster economic recovery.
Among the stocks targeted for downgrades, Novellus Systems (NVLS: news, chart, profile) fell 54 cents to $23.64, Lam Research (LRCX: news, chart, profile) dipped 42 cents to $11.50 and Newport (NEWP: news, chart, profile) dropped 60 cents to $16.20 in the pre-open.
The firm also downgraded design automation chip companies, including Synopsys (SNPS: news, chart, profile), which was losing $1.49 to $41.40.
Texas Instruments (TXN: news, chart, profile) and National Semi (NSM: news, chart, profile) were each marked lower in initial, small trades on Instinet. UBS Warburg lowered earnings estimates for the companies on its lowered outlook for analog chip sales. TI shares were clipped for a 28-cent loss to $19.96.
Separately, Micron Technology (MU: news, chart, profile) was downgraded by Morgan Stanley to "underweight" from "equal weight" on the belief that memory chip fundamentals have been weak, and that spot prices peaked in July. The stock slumped 82 cents, or 4.6 percent, to $17.01.
Sector bellwether Intel Corp. (INTC: news, chart, profile) eased 7 cents to $16.77.
Also weighing on the pre-open was a General Electric (GE: news, chart, profile), which was 55 cents, or 1.8 percent lighter, at $30.75 over the Redibook ECN. Lehman Bros. lowered its 2003 earnings forecast for the industrial conglomerate, given expectations of lower pension income, the negative effect of expensing stock options and lowered projections for contributions from its aircraft engines and power systems divisions.
Also, Concerns that Congress will widen its probe into investment banking practices were also hanging over the market, dealers said. The Wall Street Journal is reporting that Salomon Smith Barney's practice of doling out IPO shares to key clients may prompt a wider probe when the representatives get back in session. |
