Intel Weighs on Market This Morning

Also, the dollar's looking stronger against the yen after the Bank of Japan's policy board meeting.
Publish date:

Last night's

earnings shortfall from


(INTC) - Get Report

is weighing on the market this morning.

Sure, there are a ton of earnings reports yet to come, and Intel is just one stock. But it's a rather large one, with a market cap second only to


(MSFT) - Get Report



stocks. It's also a bellwether for one of the market's few areas of consistent strength since August: technology, a sector whose extremely high valuations are based on expectations of extremely strong earnings growth, quarter upon quarter.

In short, for weeks now, the big question on the market's mind has been whether exceptionally strong earnings would be able to shock investors out of their interest-rate fears enough to take stocks higher. But disappointing earnings amid those same interest-rate worries? It's not that difficult to tell how the market would react to the prospect of that scenario.

It would go lower, which is what it's prepared to do in the early going today. At 9 a.m. EDT, the

S&P 500

futures were down 8, nearly 6 points below fair value and indicating a drop at the open. Intel itself was lately indicated down nearly 5 points to 71 1/4 in premarket trading, ready to put some immediate downward pressure on the

Nasdaq Composite Index

when trading starts.

"Yesterday was rough, and really underscored how the market is really vicious when it starts looking at these basic data points," said Paul Rich, a trader at

BT Brokerage

. "All the technology stocks are trading down right now. It doesn't look like a good day. I think we're going to get hit and lay down."

"I do think the market will reward good earnings later on," Rich continued. "But today looks like one of those days when we get hit and hang around the lows."

This morning's earnings parade finds

Delphi Automotive Systems





with upside surprises,

Fannie Mae


in line with expectations and

Bear Stearns


well below consensus estimates.

The 30-year Treasury was up 4/32 to 98 24/32, putting its yield at 6.217%.

Con Edison's

(ED) - Get Report

confirmation of plans to buy

Northeast Utilities


leads today's M&A news.


The Wall Street Journal

reported that TV-station operator

Chris-Craft Industries


is mulling the sale of all or part of itself, with possible purchasers including


(CBS) - Get Report


News Corp.

(NWS) - Get Report





No major economic data are due out today. September

retail sales

figures are scheduled to be released tomorrow, and Friday brings the September

Producer Price Index


In Tokyo, Wall Street's plunge yesterday and nervousness ahead of the

Bank of Japan's

policy board meeting, scheduled for after the market close, combined to send stocks solidly lower. The


fell 336.32, or 1.9%, to 17,754.49.

As expected, the BOJ

announced that it would leave short-term interest rates unchanged. But it also said it would start buying short-term government debt in the open market to provide more liquidity to the banking system -- not quite the aggressive quantitative easing that some economists and Japanese government officials have been calling for, but still enough to cause the yen to sell off, the dollar quickly jumping from the 106-yen level up above 107.5 yen.

The greenback was lately quoted at 107.74 yen.

The central bank's move is being seen as the fruition of Governor

Masuru Hayami's



statement that the BOJ was "exploring how

it could improve money-market operations so as to assure the further permeation of liquidity in the context of a zero interest-rate policy."

Hong Kong stocks also sank in the wake of New York's weakness, the benchmark

Hang Seng

falling 283.48, or 2.2%, to 12,475.87. Cash-raising in response to some new placements was also putting pressure on stocks. Hitting the market today were 635 million shares from

Pacific Century Cyberworks

, and 2 billion shares that Chinese oil exploration company


is placing in an IPO that will run until Friday.

On Oct. 25, the Hong Kong government will launch a massive index-tracking

fund that contains a significant portion of the stock it bought when it intervened in the equity market last August.

The big European indices were all lower in early afternoon trading. London's


was down 44.3, or 0.7%, to 6130.5, while the Paris


was off 43.64, or 0.9%, to 4614.90. Frankfurt's

Xetra Dax

was 69.81 lower, or 1.3%, to 5288.65.

Wednesday's Wake-Up Watchlist


Eileen Kinsella


Brian Louis

Staff Reporters


(INTC) - Get Report

, after the close, posted third-quarter earnings of 55 cents a share, shy of the 23-analyst consensus estimate of 57 cents, but above the year-ago 45 cents a share.

wrote about Intel's earnings in a story

last night.

Credit Suisse First Boston

cut its per-share earnings forecast for 1999 on the chip giant to $2.23 from $2.31 and its 2000 forecast to $2.55 from $2.66. Meanwhile,

SG Cowen

downgraded Intel to neutral from buy,



Consolidated Edison

(ED) - Get Report

is buying

Northeast Utilities


for about $3.3 billion in cash and stock. Con Ed said it would pay $25 a share for Northeast. Northeast closed yesterday at 21 1/4.

Mergers, acquisitions and joint ventures

Chris-Craft Industries


, a TV-station operator, is exploring the sale of part or all of the company with companies including


(CBS) - Get Report


News Corp.

(NWS) - Get Report





The Wall Street Journal

reported, citing people familiar with the talks.


(NOK) - Get Report

said it was joining with



to develop pen-based wireless handheld computers.

Earnings/revenue reports and previews

Bear Stearns


reported first-quarter earnings of $1 a share, 15 cents shy of the five-analyst estimate.


(BFO) - Get Report

reported third-quarter earnings of 64 cents a share, above the 15-analyst estimate of 61 cents and up from a year-ago 56 cents.


(DEX) - Get Report

reported third-quarter earnings of 55 cents a share, in line with the two-analyst estimate, but below the year-ago 61 cents. The company said the latest quarter included a pretax charge of $3.9 million, or 8 cents a share, for a refund related to the

Department of Veterans Affairs

supply contract.

Ethan Allen

(ETH) - Get Report

posted first-quarter earnings of 45 cents a share, better than the 12-analyst estimate of 43 cents and up from 38 cents a year ago.

W.W. Grainger

(GWW) - Get Report

reported third-quarter earnings of 49 cents a share, a penny shy of the 12-analyst estimate and down from a year-ago 57 cents.

Investment Technology Group


reported third-quarter earnings of 34 cents a share, a penny below the four-analyst estimate and down from 45 cents a year ago.



posted third-quarter earnings of 19 cents a share, compared with a revised 10-analyst estimate of 18 cents, following the company's earnings warning. Pro-forma year-ago earnings were 13 cents a share.



, after the close, reported third-quarter earnings of 53 cents a share, in line with the 27-analyst estimate and up from the year-ago 7 cents a share.



reported third-quarter earnings of 1 cent a share, above the 24-analyst consensus of breakeven results, but down from a year-ago 38 cents. The company said third-quarter net fell on a $16 million contract dispute.

Time Warner


posted third-quarter basic income of 8 cents a share, above the 13-analyst estimate of 4 cents a share, and up from the year-ago loss of 3 cents a share.

Offerings and stock actions

Fleet Boston

(FLT) - Get Report

has ditched plans for a possible spinoff and IPO of


, its online brokerage unit, the



Analyst actions

SG Cowen


General Dynamics

(GD) - Get Report








Philips Realty

(PHR) - Get Report

said it hired

Prudential Securities

to weigh strategic options for the company.

The Heard on the Street column in the


reports that as part of a criminal inquiry into pension fund investments made by the former Connecticut state treasurer, Paul Silvester, federal prosecutors are looking into the activities of



, citing people familiar with the matter.