Stocks look like they'll make a weak showing out of the gates this morning.
At 9:10 a.m. EDT, the
futures were off 8.8, more than 10 points below fair value and indicating a negative open. The 30-year Treasury was down 15/32 to 100 8/32, its yield rising to 6.016%.
"It looks like the dollar shuffle again this morning," said Todd Clark, head of listed trading at
Volpe Brown & Whelan
. Clark noted that the dollar weakness was hurting the bonds this morning. "As a result, U.S. equities are coming under some pressure."
Clark also cited concerns over the semiconductor industry related to yesterday's earthquake in Taiwan, a major producer of microprocessors. With the
Nasdaq Composite Index
just shy of its all-time high, "add in Apple, and it looks like a recipe for some profit-taking," Clark said.
Clark was referring to
warning last night of a fourth-quarter earnings shortfall, which it blamed on delivery problems with
G4 processors. That may put some downward pressure on boxmakers and semiconductor firms today, though Apple's historic difficulties with meeting hot demand for its products could keep the selling isolated to that company.
But the bigger picture this morning has to do with the latest developments in the ongoing dollar/yen story.
For the past two sessions, stocks have been getting a measure of support from a growing sense in the market that the dollar's recent weakness against the yen had abated. But that support disappeared early this morning when the
Bank of Japan's
surprised everyone by voting to leave its monetary policy unchanged. Word had been flying around for several days that the BOJ was leaning toward a policy easing, most likely in the form of increasing money supply through open-market operations, as a precondition for joint intervention with the U.S.
Making matters worse for the dollar, which immediately plunged more than 2 yen on the BOJ news, are today's
said that the trade deficit unexpectedly widened to $25.1 billion in July, a new record. As an indicator of undersized worldwide demand for dollars in trade transactions, the massive deficit has some worried about the long-term sustainability of the dollar's strength.
The greenback was lately quoted at 104.27 yen.
The BOJ released a statement after its meeting, in which it claimed that foreign-exchange rates are not an appropriate guide for monetary policy. The BOJ wrote: "A valuable lesson we learned from policymaking during the bubble period is that if the formulation of monetary policy is directly tied to controlling the foreign-exchange market, there is a strong risk that that would lead to incorrect policy decisions."
also said that the BOJ would continue to intervene in the currency markets to stem volatile movements. But the central bank's statement makes it likely that future interventions will remain sterilized -- that is, the BOJ will let the yen it sells for dollars remain in the money markets, thereby keeping money supply constant.
Earlier, back when the dollar was sitting above 107.5 yen and the BOJ hadn't announced the results of its policy board meeting, stocks had surged in Tokyo. The
rose 357.53, or 2%, to 17,932.79.
In Hong Kong, the
continued to churn around in the same range it's been stuck in for the past month or so. The benchmark index fell 51.91 to 13,420.46
Financial markets were closed in Taipei after the magnitude-7.6 earthquake that struck Taiwan yesterday. The quake's human effects are devastating: More than 1,450 people are dead, and about 3,700 others are injured. But despite significant short-term losses in the semiconductor industry from power outages in the Hsin-chu industrial park near Taipei, investors shouldn't overreact to the quake, according to Duncan Wooldridge, senior economist at
in Hong Kong.
Wooldridge pointed to Japan's still-reasonable growth in 1995 after the Kobe earthquake there. At the time, Kobe was far more important to Japanese output than the worst-hit areas of central Taiwan in Tuesday's quake. Yet, "the economy in Japan grew at quite a healthy pace in the quarter coming after the earthquake," he said.
After opening firm, European markets were trending south after the BOJ announcement. London's
was off 73.8, or 1.2%, to 5982.7, while the Paris
was down 63.39, or 1.4%, to 4617.10. Frankfurt's
was down 76.63, or 1.4%, to 5275.35.
Tuesday's Wake-Up Watchlist
Mergers, Acquisitions and Joint Ventures
said they have forged a new nationwide U.S. wireless telephone pact. According to the deal's terms, Bell will hold a 55% stake in the venture, carrying a value of more than $70 billion.
inked a $330 million mobile infrastructure pact with
. The deal calls for Ericsson to provide Cricket with digital mobile systems that supply voice and data services.
U S West
said that federal and state applications for their $35 billion agreement will be finished by tomorrow. In a joint statement, the companies said roughly 500,000 Qwest shareholders and a million U S West owners would receive a copy of their final joint-merger proxy for their stockholder meetings on Nov. 2.
announced its plans to buy
Southern Foods Group
in a deal valued at $6 billion. According to the terms of the transaction, Suiza would hold a 66.2% stake in the merger, with the remaining interest held by
Dairy Farmers of America
, which owns half of Southern Foods. The joint business, which will be known as
Suiza Fluid Dairy Group
, will receive raw milk from Dairy Farmers. Suiza said that Southern President and CEO Pete Schenkel would replace Suiza President and CEO G. Irwin Gordon, who has decided to depart from the company, upon the deal's completion.
Earnings/Revenue Reports and Previews
In premarket activity, Apple shares were trading down to 71 3/4 from Monday's closing price of 79 1/16, after the company warned investors that it would post fourth-quarter earnings well below the previous quarter's results of 69 cents a share, missing the 19-analyst estimate of 76 cents,
reported. Apple blamed the disappointing earnings on delivery problems with Motorola's G4 processor chips, which are used in Apple's
Power Mac G4
posted second-quarter earnings of 55 cents a share, in line with the seven-analyst estimate of 55 cents and beating the year-ago 45 cents a share.
warned investors that it would report disappointing fiscal 1999 results from $3.20 to $3.30 a share.
posted second-quarter earnings of 91 cents a share, in line with the 15-analyst estimate of 91 cents and beating the year-ago 81 cents.
Discount Auto Parts
posted first-quarter earnings of 44 cents a share, missing the five-analyst estimate of 45 cents and the year-ago 42 cents.
posted third-quarter earnings of $1.32 per share, easily beating the 11-analyst estimate of $1.09 cents.
reported second-quarter earnings of 27 cents a share, in line with the six-analyst estimate of 27 cents a share and beating the year-ago 24 cents.
posted fourth-quarter earnings of 2 cents a share, missing the three-analyst estimate of 4 cents a share but up from the year-ago 72-cent loss.
Pepsi Bottling Group
reported third-quarter earnings of 59 cents a share, beating the three-analyst estimate of 55 cents but down from the year-ago 81 cents a share.
preannounced a first-quarter per-share loss between $1.20 to $1.30, greatly missing the 11-analyst estimate of a $1.06 loss.
initiated coverage of
with intermediate market-perform and long-term outperform ratings.
sliced its rating on
to neutral from outperform.
rolled out coverage of
with a neutral rating.
said it has chosen Executive Vice President Robert Blair to become its president and CEO. Blair is replacing Fred Chan, who will continue to serve as the company's chairman.
said it has tapped President and COO Craig Conway to serve as the company's CEO.
Philip Segal contributed to this report.