Earnings Season Arrives Amid This Morning's Holiday Lull
Finally, some numbers the market can sink its teeth in. Or at least gum for a while.
Yes, the long-awaited earnings season kicks off today. The one that was supposed to yank the market off its
Fed
watch post. The one that, according to
First Call/Thomson Financial
, analysts expect to yield earnings growth of more than 19% from last year.
Whether that kind of performance matters -- that is, whether it's already priced in, or whether it's trumped by fears that interest rates are going higher -- is what the market will start negotiating today. But it will have to negotiate without its much-needed guide, the bond market, which is closed today in observance of Columbus Day. Volume, thus, will likely be muted today.
Abbott Laboratories
(ABT)
has already come out this morning in line with expectations.
All talk of strength aside, how much investors choose to focus on this quarter's negative surprises will also be a good litmus test of the market's psychology. This morning
Knight Trimark
(NITE)
was falling in premarket trading after warning that its third-quarter earnings won't make estimates.
Stocks weren't assuming anything this morning. At 9 a.m. EDT, the
futures were off 1.6, about a point below fair value and indicating a slightly negative bias to the open.
"You don't have the typical October moroseness over stocks," said Doug Myers, vice president of equity trading at
IJL Wachovia
. "At the same time, there's not exuberance in the market." Myers said that a lot of traders are waiting for the "vacillations and oscillations" of the gold and oil markets to sort themselves out. In the meantime, "you'll probably see volume stay on the light side as people decide not to decide."
Crude futures were lately quoted at $21.24 a barrel, up from Friday's $20.90 close. Gold was trading at $317.50 an ounce, down from Friday's New York close of $320.20.
Meanwhile, traders will be keeping one ear turned toward Phoenix, where Fed boss
Alan Greenspan
will speak at an
American Bankers Association
meeting at 10:00 a.m. EDT. A pointed phrase from Greenspan has roiled a thin market or two in the past, after all.
Global Crossing
(GBLX)
leads the morning's M&A news with its acquisition of the U.K.'s
Racal Telecom
.
U.S. foreign exchange markets are also effectively closed for the holiday. But the dollar trades on. Giving back some of its recent gains against the yen, the greenback was lately quoted at 106.73 yen. Traders betting on or against a quantitative easing of monetary policy by the
Bank of Japan
are looking ahead to the central bank's meeting this Wednesday.
Tokyo markets were closed today in observance of Taiiku-no-ki, or Health and Sports Day.
In Hong Kong, with all of this holiday observance putting a crimp on liquidity, the benchmark
Hang Seng
endured a volatile session, swinging between 12,913 and 13,150 to finally close down 119.70, or 0.9%, at 12,992.72. Some market participants were partially ascribing the weakness to worries over the pending sale of the Hong Kong government's blue-chip
index fund , a unit trust that holds the stock the government acquired during its $15 billion market intervention in August of last year.
The big European indices were recovering from morning weakness in early afternoon trading. Frankfurt's
Xetra Dax
was up 1.99 to 5421.25, while the Paris
CAC
was up 0.71 to 4722.64.
London's
FTSE
was up 9.2 to 6208.6 after falling back on the release of slightly stronger-than-expected factory gate price data.
Monday's Wake-Up Watchlist
By
Eileen Kinsella
and
Brian Louis
Staff Reporters
Mergers, acquisitions and joint ventures
Ask Jeeves
undefined
, a provider of natural-language, question-answering services on the Web, said
Microsoft
(MSFT)
will expand its use of Ask Jeeves' "Corporate Question Answering Service" on Microsoft's personal online support site.
TSC
reported on the
deal in a story this morning.
Deutsche Telekom's
(DT)
CEO told
Focus
, a German magazine, that Deutsche Telekom is pondering selling its 25% stake in
Global One
to
France Telecom
(FTE)
, according to a
Reuters
report.
German newspaper
Welt am Sonntag
said Deutsche Telekom is in talks with
SBC Communications
undefined
. However, the article didn't state whether the talks were regarding an alliance or a merger,
Reuters
reported.
Global Crossing
(GBLX)
confirmed it's buying
Racal Electronics'
Racal Telecom
for roughly $1.65 billion. The news was reported in today's
Wall Street Journal
and
Financial Times
.
Nokia
(NOK)
said it will begin cooperation with
IBM
(IBM)
in promoting and building mobile Net solutions.
Unisys
(UIS)
announced a multimillion-dollar agreement with
Dow Jones
undefined
, publisher of the
Journal
, as part of a redesign initiative for the editorial and pagination processes.
Warnaco Group
undefined
has offered to buy
Authentic Fitness
(ASM)
for $20.50 a share in cash, a 16.7% premium over Authentic Fitness' closing price Friday.
Earnings/revenue reports and previews
(Earnings estimates are from
First Call/Thomson Financial
.)
Abbott Laboratories
(ABT)
posted third-quarter earnings of 38 cents a share, in line with the 15-analyst estimate.
Datastream Systems
(DSTM)
said it sees third-quarter earnings of between a 1-cent profit, or a 1-cent loss, well below the four-analyst estimate of 16 cents a share.
Fastenal
(FAST)
reported third-quarter earnings of 45 cents a share, a penny shy of the six-analyst estimate of 46 cents a share, but up from a year-ago 37 cents.
Knight/Trimark
(NITE)
warned that it sees third-quarter earnings between 17 cents and 19 cents a share, citing slower trading. The 10-analyst estimate currently calls for earnings of 30 cents a share.
TSC's
James Cramer
had his
say on the preannouncement this morning.
New Era of Networks
(NEON)
said it see third-quarter revenue to be about $30 million to $32 million, a record for quarterly earnings. The company said it expects to report a net loss, about in line with estimates. The 10-analyst estimate calls for a loss of 18 cents a share in the third quarter.
Private Business
undefined
said it expected third-quarter and annual earnings to fall below analyst estimates. The company said it sees third-quarter earnings between 4 cents and 5 cents a share, and fourth-quarter EPS between 4 cents and 6 cents. The two-analyst estimate calls for 7 cents and 11 cents, respectively.
Analyst actions
Morgan Stanley Dean Witter
upgraded
Chevron
(CHV)
to outperform from neutral.
J.P. Morgan
downgraded
Norfolk Southern
(NSC)
to long-term buy from buy.
Morgan Stanley upgraded
Texaco
(TX)
to outperform from neutral.
Miscellany
British Airways
(BAB)
said it would buy 12
Airbus Industries
A318 planes for $471.4 million, and had options for an additional 12. The deal comes as a blow to
Boeing
(BA)
, which had hoped to sell its own 100-seater, the 717.
DaimlerChrysler
(DCX)
said it will invest $27.5 billion in Germany over the next three years. The money earmarked for Germany is part of a $47.66 billion worldwide investment package announced earlier this year.
The "Heard on the Street" column in the
Journal
cites two new studies which show that employee options grants do not cut company net income by as much as previously thought.
