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Stocks Look Set to Continue Downward Momentum

The Bank of England took the markets off guard with an unexpected rate hike.

Stocks are set to continue

yesterday's slide.

At 9:05 a.m. EDT, the

S&P 500

futures were down 7.9, more than 7 points below fair value and indicating a drop at the open. Stock futures had been sitting close to break-even early this morning before the

Bank of England

surprised almost everybody by announcing that it was raising its key interest rate. (See below.)

"The market's pretty nervous, so it's not going to help things," said Brad Benshop, vice president of CME equities at

J.P. Morgan Futures

. "What surprised me was that the bonds seemed to take it in stride. I'd keep an eye on them, to see if they take notice."

The 30-year Treasury wasn't overreacting. The long bond was lately off 7/32 to 100 14/32, its yield rising to 6.093%.

The market may get some measure of upside momentum from news that

Goldman Sachs


Abby Joseph Cohen

has raised her 1999 S&P 500 target to 1385 from 1350. But on a day relatively devoid of major news and absolutely devoid of major economic data, all ears will be turned toward Grand Rapids, Mich., where

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Alan Greenspan

is scheduled to speak on technology's impact on the U.S. economy at an event honoring former President

Gerald Ford

at Grand Valley State University.

The G-man starts speaking at 11:45 a.m. EDT. After the shocker at

Jackson Hole two weeks ago, traders will be ready for anything out of the ordinary he has to say about productivity, which may enliven the normally tranquil midday trading hour a bit.

In Tokyo, the


fell 66.12, or 0.4%, to 17,641.38 in light volume. Yesterday's uninspiring corporate capital spending survey seems to be keeping traders from placing aggressive bets ahead of the release of Japan's April-June quarter gross domestic product data tomorrow. Economists polled by the

Nihon Keizai Shimbun

poll expect


to decline 0.2%, but with the news Japanese companies spent 13.4% less in the April-June quarter than they did last year, the market won't be altogether shocked by a lower figure. Seven of the 27 economists polled by


lowered their estimates in a new poll today, with the mean estimate now calling for a contraction of 0.35%, down from the prior 0.3%.

Reflecting that slight shift in sentiment and the consolidation in equities, the yen edged lower in a narrow range against the dollar overnight. The greenback was lately quoted at 110.79 yen.

Stocks continued to consolidate in lackluster trading in Hong Kong, the

Hang Seng

falling 39.46, or 0.3%, to 13,356.63. In Indonesia, the

Jakarta Stock Exchange

composite index sank 3.65 to 541.70 amid continuing violence in East Timor.

European markets were trending lower after the

Bank of England

unexpectedly raised its key short-term interest rate to 5.25%. The move, predicted by none of the 26 economists polled by


last week, sent London's


tumbling 85.3, or 1.4%, to 6224.2.

"We're shaken but not stirred too much, I suppose," said David Smith, managing director at

Cantor Fitzgerald

in London. "It's a surprise it came when it did, and it came at a time when we were looking for a trend. Higher rates are the one trend emerging."

The big continental markets were following London lower. The Paris


was 27.78 lower to 4652.15, while the

Xetra Dax

was down 44.51, or 0.8%, to 5346.85, weighed down by weaker-than-expected industrial production data. The government reported that industrial output grew 1% in July, missing the 1.7% estimated by economists in the



Wednesday's Wake-Up Watchlist


Brian Louis

Staff Reporter

Global Crossing







have established a new joint venture company called

Asia Global Crossing

that will provide network-based telecommunications services throughout Asia. Responsibility for the management and operation of the network will fall on Global Crossing. Global Crossing will initially own 93% of the joint venture with Softbank and Microsoft each owning 3.5%.

Ingram Micro


said "based on previously discussed difficult market Conditions, primarily in the United States," it expects to post earnings of 10 cents to 14 cents a share for the third quarter, which would fall short of the 13-analyst estimate of 41 cents. The company also said it has started a search for its next CEO to succeed Jerre L. Stead. Stead will remain chairman of the board and CEO until a successor is in place and will then continue to serve as chairman of the board.

Mergers, acquisitions and joint ventures

America Online



TV Guide


will supply television program listings to the Internet service provider.



is acquiring privately held

for $78.3 million in stock plus the assumption of the company's stock option plan.



, a U.K. pharmaceuticals concern, said it's in talks, which could lead to a recommended cash offer for the company,





announced that it has struck a bill payment service deal with




Earnings/revenue reports and previews

(Earnings estimates are from

First Call


Carbide Graphite


posted fourth-quarter earnings of 32 cents a share, beating the two-analyst estimate of 30 cents, but down from the year-ago 54 cents.

Esterline Technologies


reported third-quarter earnings of 34 cents a share, missing the two-analyst estimate of 39 cents and coming in below the year-ago 45 cents.

Korn/Ferry International


posted first-quarter earnings of 15 cents a share, beating both the two-analyst estimate of 11 cents and the year-ago 5 cents.



posted second-quarter earnings of 34 cents a share, ahead of the two-analyst estimate of 31 cents and up from the year-ago 25 cents.



posted fourth-quarter earnings of 48 cents a share, beating the two-analyst estimate of 30 cents and up from the year-ago 16 cents.

Analyst actions

Donaldson Lufkin & Jenrette

initiated coverage of



with a market perform rating.

Warburg Dillon Read

initiated coverage of



with a buy rating and a $50 price target.

DLJ initiated coverage of



with a top pick rating.

Warburg rolled out coverage of



with a buy rating and a 12-month price target of $23.

Merrill Lynch




to near-term buy from near-term accumulate.


Procter & Gamble


is preparing to launch an upscale hair-care brand called "Physique," according to a report in

The Wall Street Journal


-- Tara Murphy contributed to this report.