Stocks Seen a Little Higher at Open
December 10th, 2011
Investors were seen treading lightly.
Stocks were seen a little firmer at the open on Monday, bouncing from Friday’s big losses as the market was roiled by warnings from high profile firms that indicate financial results will disappoint.
But investors were seen treading lightly ahead of Tuesday’s meeting of the Federal Reserve, where few expect a change in the interest-rate landscape for now.
With more than an hour to go to the opening bell, Nasdaq 100 index futures were up 33.00 points at 3,6520 while S&P 500 index futures were trading at 1,460.70, up 7.00 points.
“It looks like we are going to bounce back and take back some of the losses we had on the last hour of trading Friday,” said Bill Meehan, chief market analyst at Cantor Fitzgerald.
He was referring to the deepening losses that day in late trade, when U.S. stocks ended the third quarter on a sour note as a profit warning from computer maker Apple Computer Co. (NasdaqNM:AAPL – news) shattered hopes of an end to September’s slew of negative earnings forecasts.
“A couple of mergers are helping and this morning Europe is firm, so everybody’s happy,” added Meehan.
The Netherlands’ ASM Lithography NV (NasdaqNM:ASML – news) said on Monday it would buy rival semiconductor equipment maker Silicon Valley Group Inc (NasdaqNM:SVGI – news) for 1.8 billion euros ($1.6 billion) in stock, creating the largest maker of lithography equipment to the semiconductor industry.
American depositary.
The American depositary receipts of ASML closed at $32-5/16 in Friday’s Nasdaq trading, down $1-1/2 while Silicon Valley shares closed at $26-5/16 Friday.
In another tie-up announcement, FleetBoston Financial Corp. (NYSE:FBF – news), the eighth-largest U.S. bank holding company, said late Sunday it would buy New Jersey-based Summit Bancorp (NYSE:SUB – news) for $7 billion, creating a bank with some $220 billion in assets. Summit shares shot up 25 percent last week on speculation that this deal was in the works. FleetBoston shares closed at $39 Friday while Summit closed at $34-1/2.
Meanwhile, analysts said they expected no wild swings in the market ahead of the Federal Reserve’s monetary policy meeting on Tuesday. The markets will be looking to see if the Fed will return to a neutral policy stance, removing its bias toward tightening to ward off a possible resurgence in inflation.
None of Wall Street’s 29 primary dealers believes the Fed will raise interest rates for a seventh time in the current tightening cycle, according to a Reuters poll of primary dealers, with almost all signs pointing to a comfortable easing in economic growth and restrained inflation.
But few expected the Fed to move to a neutral stance.
“I think with oil prices still high and economic numbers coming in on the firm side, the Fed is going to retain that bias in its statement,” said Michael Moran, chief economist at Daiwa Securities America.
The Fed has raised interest rates by 1.75 percent to 6.5 percent from June 1999 to May, but has been on hold since then. The Fed’s Open Market Committee will make its announcement on Tuesday at about 2:15 p.m. (1815 GMT) at the close of its meeting.
On the calendar Monday are the National Association of Purchasing Managers (NAPM) Purchasing Managers’ Index, a measure of manufacturing activity, for September, and construction spending data for August, both due to be released on Monday at 10 a.m. (1400 GMT).
In a preliminary Reuters poll, economists expect the NAPM to climb up to 50.0 after having dropped to 49.5 in August. Any reading below 50 indicates slowing growth in the manufacturing sector. Construction spending is seen rising by 0.3 percent on the month after falling 1.6 percent the previous month.
On Friday, the technology-dominated Nasdaq composite index (.IXIC) ended down 105.50 points, or 2.79 percent, at 3,672.82, near its low for the day. The blue-chip Dow Jones industrial average (.DJI) lost 172.33 points, or 1.59 percent, to close at 10,650.92.
Apple’s warning late Thursday that its earnings would miss estimates by as much as 33 percent due to slower-than-expected sales this month also sparked a broad sell-off in other computer-related issues.It heightened concern among investors that the entire industry is facing slower growth. Their confidence was already shaken following a bombshell warning of weaker-than-expected sales late last week by leading computer chip maker Intel Corp. (NasdaqNM:INTC – news).
More warnings have come out since, including one late on Friday from Caterpillar Inc. (NYSE:CAT – news), the world’s largest maker of construction and mining equipment, which said it expected third quarter profits to miss estimates. But traders said they did not expect this warnings to rock the market.
The shares of Caterpillar, which is one of the 30 blue chip companies that make up the Dow Jones Industrial average, were down in pre-open trade on Monday at $30, versus their close at $33-3/4 on the New York Stock Exchange Friday.Apparel maker Warnaco Group Inc. (NYSE:WAC – news) also said late on Friday it expects to post wider-than-expected operating losses in the third quarter due to falling sales. Warnaco closed at $4 on Friday, before the announcement was made.