U.S. markets head for lower open
Enviado: 9/7/2003 14:34CBS MarketWatch
U.S. markets head for lower open
Wednesday July 9, 9:01 am ET
By Steve Gelsi
NEW YORK (CBS.MW) - U.S. stocks headed for a lower open Wednesday as investors catch their breath on the heels of recent gains.
S&P futures are down 3.30 at 1,004.30. Nasdaq futures are off 5.50 at 1,293.50
"We've been thinking the market's an up market, but that doesn't mean there won't be pauses in any given day or week," said Clark Yingst, chief equity strategist at Joseph Gunnar.
Traders are tentative as Wall Street debates whether the market's strong gains in recent months constitute a bear market correction, or the start of a new bull market, he said.
"This rally has more legs, better breadth, more resiliency, and good leadership from the technology and financial sector," he said. "There's no comparison to other bear market rallies to me, but the debate continues."
Wall Street may look toward Yahoo (NasdaqNMYHOONews) for cues on whether to continue buying, Yingst said. After the market close on Wednesday, the Internet bellwether is expected to report second-quarter earnings of 8 cents per share, and revenue of $315.1 million, according to a survey of analysts by Thomson First Call.
Richard Dickson, technical analyst at Lowry Research, said in a note to clients the equity market's technical condition continues to point to higher prices ahead, but he sounded a cautious tone about current market conditions.
He said only the Nasdaq Composite (NasdaqSC^IXICNews) is sporting any overbought readings, and those are only "very short-term" momentum indicators.
He did say, however, that if short-term demand readings continue to be "sluggish," it would "raise a red flag" about the prospects for sustainable gains over the next two to four weeks. "But, absent any accompanying signs of distribution or rising supply, these indications of lagging demand provide little basis for expecting an imminent market top," Dickson said.
On the economic front, rising interest rates and the vacation season marked a drop in mortgage lending activity abruptly in the week ending July 4, the Mortgage Bankers Association said Wednesday.
The bankers' group said applications dropped 17.7 percent from the previous week. Refinance applications dropped 21.3 percent and purchase applications fell 5.5 percent. The average rate for a 30-year fixed-rate mortgage rose to 5.37 percent from 5.23 percent the previous week.
Among Dow components, Microsoft (NasdaqNMMSFTNews) is in the spotlight on Wednesday after the software giant said it would pay employees with restricted stock instead of stock options. The move is expected to have a big impact in the tech sector and among other blue chips.
Shares of Altria (NYSEMONews) are sliding $1.27, or 2.7 percent, to $45.50 in Instinet pre-open trading after Analyst David Adelman at Morgan Stanley said he now anticipates "two likely short-term negative developments" for the tobacco company. Adelman said legal anxiety will increase given his belief that the Illinois district court of appeals will find trial judge Bryon did not have the authority to change the required Miles bond of $12 billion.
Adelman also thinks that second-quarter unit volume growth will be 1 to 1.5 percent, well below expectations of 4 percent.
In addition, the Dow industrials component may be weighed down by a report in the Wall Street Journal that rivals R.J. Reynolds (NYSERJRNews) and Brown & Williamson have held discussions to merge their tobacco operations due to severe price competition.
Analyst Michael Mayo at Prudential raised his rating on Citigroup (NYSECNews) to "hold" from "sell," citing an increased earnings outlook resulting from "unique positioning" and low rates, expectations of a 20 percent dividend hike and the belief that trading revenue may be more sustainable. Mayo also upped his second-quarter earnings forecast, for the second time in a month, to 82 cents a share from 80 cents, and his full-year estimate to $3.35 a share from $3.30.
Analyst Wayne Atwell at Morgan Stanley downgraded Alcoa (NYSEAANews) to "equal weight" from "overweight," citing the aluminum company's plans to invest in low return projects over the next 3 to 4 years, poor results from its diversification program and limited near-term financial flexibility resulting from a highly leveraged balance sheet. Atwell said believes the company will need to close some smelting operation to lower costs.
Intel Corp. (NasdaqNMINTCNews) rose in pre-market trades as UBS raised its price target on the stock to $29 from $26 ahead of Intel's second quarter earnings, slated for release on July 15.
"While we do not expect Intel to materially beat our $6.7 billion sales estimate for the second quarter, we do believe that the Centrino results will be strong," the broker said.
U.S. markets head for lower open
Wednesday July 9, 9:01 am ET
By Steve Gelsi
NEW YORK (CBS.MW) - U.S. stocks headed for a lower open Wednesday as investors catch their breath on the heels of recent gains.
S&P futures are down 3.30 at 1,004.30. Nasdaq futures are off 5.50 at 1,293.50
"We've been thinking the market's an up market, but that doesn't mean there won't be pauses in any given day or week," said Clark Yingst, chief equity strategist at Joseph Gunnar.
Traders are tentative as Wall Street debates whether the market's strong gains in recent months constitute a bear market correction, or the start of a new bull market, he said.
"This rally has more legs, better breadth, more resiliency, and good leadership from the technology and financial sector," he said. "There's no comparison to other bear market rallies to me, but the debate continues."
Wall Street may look toward Yahoo (NasdaqNMYHOONews) for cues on whether to continue buying, Yingst said. After the market close on Wednesday, the Internet bellwether is expected to report second-quarter earnings of 8 cents per share, and revenue of $315.1 million, according to a survey of analysts by Thomson First Call.
Richard Dickson, technical analyst at Lowry Research, said in a note to clients the equity market's technical condition continues to point to higher prices ahead, but he sounded a cautious tone about current market conditions.
He said only the Nasdaq Composite (NasdaqSC^IXICNews) is sporting any overbought readings, and those are only "very short-term" momentum indicators.
He did say, however, that if short-term demand readings continue to be "sluggish," it would "raise a red flag" about the prospects for sustainable gains over the next two to four weeks. "But, absent any accompanying signs of distribution or rising supply, these indications of lagging demand provide little basis for expecting an imminent market top," Dickson said.
On the economic front, rising interest rates and the vacation season marked a drop in mortgage lending activity abruptly in the week ending July 4, the Mortgage Bankers Association said Wednesday.
The bankers' group said applications dropped 17.7 percent from the previous week. Refinance applications dropped 21.3 percent and purchase applications fell 5.5 percent. The average rate for a 30-year fixed-rate mortgage rose to 5.37 percent from 5.23 percent the previous week.
Among Dow components, Microsoft (NasdaqNMMSFTNews) is in the spotlight on Wednesday after the software giant said it would pay employees with restricted stock instead of stock options. The move is expected to have a big impact in the tech sector and among other blue chips.
Shares of Altria (NYSEMONews) are sliding $1.27, or 2.7 percent, to $45.50 in Instinet pre-open trading after Analyst David Adelman at Morgan Stanley said he now anticipates "two likely short-term negative developments" for the tobacco company. Adelman said legal anxiety will increase given his belief that the Illinois district court of appeals will find trial judge Bryon did not have the authority to change the required Miles bond of $12 billion.
Adelman also thinks that second-quarter unit volume growth will be 1 to 1.5 percent, well below expectations of 4 percent.
In addition, the Dow industrials component may be weighed down by a report in the Wall Street Journal that rivals R.J. Reynolds (NYSERJRNews) and Brown & Williamson have held discussions to merge their tobacco operations due to severe price competition.
Analyst Michael Mayo at Prudential raised his rating on Citigroup (NYSECNews) to "hold" from "sell," citing an increased earnings outlook resulting from "unique positioning" and low rates, expectations of a 20 percent dividend hike and the belief that trading revenue may be more sustainable. Mayo also upped his second-quarter earnings forecast, for the second time in a month, to 82 cents a share from 80 cents, and his full-year estimate to $3.35 a share from $3.30.
Analyst Wayne Atwell at Morgan Stanley downgraded Alcoa (NYSEAANews) to "equal weight" from "overweight," citing the aluminum company's plans to invest in low return projects over the next 3 to 4 years, poor results from its diversification program and limited near-term financial flexibility resulting from a highly leveraged balance sheet. Atwell said believes the company will need to close some smelting operation to lower costs.
Intel Corp. (NasdaqNMINTCNews) rose in pre-market trades as UBS raised its price target on the stock to $29 from $26 ahead of Intel's second quarter earnings, slated for release on July 15.
"While we do not expect Intel to materially beat our $6.7 billion sales estimate for the second quarter, we do believe that the Centrino results will be strong," the broker said.