After Monday's Roaring Gains, Stocks Look to Give a Little Back

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After yesterday's sugar high, the stocks look little cranky this morning. The market is under some pressure at the open.

Even in the midst of yesterday's surge, many traders thought that the move was a bit overdone. Sure, October was over. And yes, the world's problems weren't as bad for the U.S. stock market as everyone thought last Monday. But even with some rumors of some big shorts having to cover, there was a feeling that Wall Street, still fried from last week's action, had taken its eye off the ball.

"Yesterday was just an overbought condition," says Matt Ruane, senior block trader at

Gerard Klauer Mattison

. "I wouldn't be surprised if you give back at least half the gains today." Ruane says that tech stocks will take hits across the board, and that the stocks in the

Dow Jones Transportation Index

are looking weak. He's going into drugs as a defensive play.

If investors decide that yesterday's move was a bit immoderate, there's a precedent -- Hong Kong stocks slipped overnight, retracing most of Monday's gains. Analysts put resistance levels on the

Hang Seng

index at about 11,700, while support levels are at about 10,700. Yesterday, Hong Kong stocks explored nearly the entire range in between. Up as high as 11,660.97 in the early going, the Hang Seng closed at 10,780.78, off 473.33, or 4.21%.

It wasn't all bad news in Asia, though. Japanese investors came back from their holiday and did a little buying. The

Nikkei

closed up 41.16 at 16,500.10.

And in Thailand, traders had something to cheer about:

Prime Minister Cavalit Yongchaiyudh

-- the man Thai's blame for their country's economic woes -- is resigning. The

Thai SET

surged 30.89 points, or 6.90%, to close at 478.33.

In Europe, it is not Thailand, but Hong Kong that investors are taking their cues from.

Frankfurt traders had not just anticipation of a drop in New York to worry about, but a drop in the dollar -- always damaging to Germany's export-driven companies. The

Dax

fell 41.62 to close 3812.45.

London stocks are following suit. The

FTSE

is off 7.10 at 4899.30.

With the world's no-confidence vote on the U.S. open, the

S&P 500

futures are off 6.30, about 4 points below fair value and indicating a negative open.

The Treasury market looks like its taking up the stock market's slack. The 30-year Treasury bond is up 3/32 at 102 6/32, lowering the yield to 6.21%.

Toronto-based

Newcourt Credit Group

(NCT)

is negotiating to buy

AT&T Capital

(ATC)

. Should the deal go through, Newcourt, at the end of 1996 the 13th largest North American asset-based finance company, would hop up to the number 2 spot behind

GE Capital Corp.

.

Newbridge Networks

(NN)

warned that second-quarter income will be within 10% to 15% of the first-quarter's 26 cents per share. Which is a sort of sneaky way of saying that it will earn 22 to 23 cents per share -- well below First Call estimates for the company to earn 31 cents per share.

Despite the Ontario-based networker's rather creative press release, its called down 9 1/4 at 49 on

Reuters Instinet

this morning. Newbridge's pain (but really, a 10 for artistic expression on that press release) is weighing heavily on the other networkers in preopening trade, and will draw even more focus on

Cisco's

(CSCO) - Get Report

first-quarter earnings, due to be released after the close.

Wonder what William Rabin, the respected

J.P. Morgan

networking analyst that raised Newbridge to buy from long-term buy yesterday thinks about the company today.

Aetna

(AET)

reported third-quarter earnings of 98 cents per share, 4 cents shy of

First Call

consensus estimates.

Trading in

Oxford Health

(OXHP)

, which had a celebrated blow-up last week, is halted pending news.