Stocks Look Strong This Morning Following Microsoft Earnings - TheStreet

Stocks Look Strong This Morning Following Microsoft Earnings

In Indonesia, stocks undergo turbulence as the presidential election takes some unexpected turns.
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For the second straight session, stocks are set to make an impressive entrance in the early going.

Thank

Microsoft

(MSFT) - Get Report

and its blowout

numbers from last night. Softee's strong earnings report, with its assurances of "awesome" PC demand, comes at a crucial time for the

Nasdaq Composite Index

, whose largest stocks have been under pressure in the wake of last week's earnings shortfall from

Intel

(INTC) - Get Report

and

Dell's

(DELL) - Get Report

profit warning

Monday night.

The market: Join the discussion on

TSC

Message Boards.

By the same token, it couldn't have come at a worse time for those who feel certain that the market can't convincingly resume its upward climb until big-cap tech capitulates. Big-cap tech is most certainly not ready to capitulate this morning: With Softee lately indicated up 5 5/16 to 91 9/16 in premarket trading, the Nasdaq should rally hard at the open.

Of course, that rally will have to contend with the still significant cautiousness in the market, which has been leading many traders to sell into any strength in stocks. Yesterday afternoon, for example, caution washed out all of the Nasdaq's early 40-plus point gain.

Stocks will also have to compete with some rather meaty yields in the fixed-income market. The 30-year Treasury was lately down 7/32 to 96 23/32, putting the yield at 6.371%. The December bond futures contract was down 8 to 110 26/32.

"I don't think we're going to get carried away here," said Todd Clark, head of listed trading at

Volpe Brown & Whelan

. "I think it's going to be similar to yesterday. The bond market is afraid of its own shadow, and as long as that continues to occur, the only demand for equities will be from shortcoverers."

Right now, though, things look good. At 9:05 a.m. EDT, the

S&P 500

futures were up 5, about 10 points above fair value and indicating a strong open.

There are no major economic data due out today. The biggest government figures this morning are those on the international trade deficit, which the

Commerce Department

said narrowed to $24.1 billion in August from a revised $24.89 billion in July. Economists in the

Reuters

poll had been expecting a narrowed trade deficit of $24.7 billion.

In Asia, the relatively benign CPI and the relative strength it inspired on Wall Street

yesterday brought investors back to the long side of stocks, where they hadn't been spending much time since the U.S.

Producer Price Index

came out so hot

last Friday. Hong Kong's

Hang Seng

shot up 364.43, or 3%, to 12,498.56. In Tokyo, the

Nikkei

gained 280.54, or 1.6%, to 17,534.71.

The CPI also helped firm the dollar up against the yen. The greenback moved above the 106-yen level overnight, and was lately quoted at 105.8 yen.

In Jakarta, stocks suffered through a turbulent session overnight as Indonesia's presidential election took a couple of unexpected turns. The

Jakarta Stock Exchange Composite Index

rose as much as 10% after President

B.J. Habibie

withdrew from the race, but stocks turned tail amid violence that gripped the capital on news that ailing Muslim leader

Abdurrahman Wahid

had defeated front-runner Megawati Sukarnoputri, the popular daughter of Indonesia's first president, Sukarno. The benchmark index ultimately gained just 0.78 to 584.43.

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

FTSE

was up 14.1 to 6007.8, while the Paris

CAC

was 6.12 higher to 4597.32. Frankfurt's

Xetra Dax

was off 18.71 to 5278.20.

The euro is coming under a bit of pressure today from a weaker-than-expected West German business confidence survey by the

Ifo

research institute. The euro fell through the $1.08 level on the release of the survey, which was unchanged for September at 95.4, disappointing expectations for a reading of 96.3. The euro was lately quoted at $1.0766.

Wednesday's Wake-Up Watchlist

By

Tara Murphy

and

Brian Louis

Staff Reporters

Microsoft

(MSFT) - Get Report

after the close posted better-than-expected earnings. Mister Softee reported fiscal first-quarter operating earnings of 38 cents a share, 4 cents ahead of the 27-analyst

First Call/Thomson Financial

consensus estimate.

TheStreet.com

wrote about Microsoft's earnings in a story

last night.

Chase

(CMB)

reported third-quarter earnings of $1.37 a share, a nickel ahead of the 20-analyst First Call consensus estimate and up from the year-ago 82 cents.

America Online

(AOL)

is expected to report earnings today. The First Call 32-analyst estimate calls for AOL to earn 13 cents a share.

Earnings/revenue reports and previews

(Earnings estimates are from First Call/Thomson Financial.)

Bausch & Lomb

(BOL)

said it doesn't know the reason for its stock's swoon since posting earnings last week. The company said it's comfortable with the consensus estimate for earnings in 2000. The 11-analyst estimate calls for the company to earn $3.08 a share in 2000.

Bell Atlantic

(BEL)

posted third-quarter earnings of 76 cents a share, in line with the 17-analyst estimate and up from the year-ago 69 cents.

Burlington Resources

(BR) - Get Report

posted third-quarter earnings of 23 cents a share, a penny shy of the 27-analyst estimate. The company posted earnings of 8 cents a share in the year-ago period.

Dime Bancorp

(DME)

posted third-quarter earnings of 55 cents a share, in line with the 13-analyst estimate but down from the year-ago 56 cents.

EMC

(EMC)

reported third-quarter earnings of 29 cents a share, 2 cents ahead of the 20-analyst estimate and up from the year-ago 19 cents.

Fleet Boston

(FLT) - Get Report

reported third-quarter earnings of 74 cents a share, a penny ahead of the 11-analyst estimate and up from the year-ago 52 cents.

Fort James

(FJ)

posted third-quarter earnings of 50 cents a share, 1 cent ahead of the 10-analyst estimate but down from the year-ago 66 cents.

General Dynamics

(GD) - Get Report

posted third-quarter earnings of 90 cents a share, a penny higher than the 12-analyst estimate and up from the year-ago 78 cents.

Harrah's Entertainment

(HET)

reported third-quarter earnings of 58 cents a share, better than the 20-analyst estimate of 50 cents and the year-ago 44 cents.

Jostens

(JOS)

reported a third-quarter loss of 21 cents a share, narrower than the two-analyst estimate of a 22-cent loss but down from the year-ago loss of 20 cents.

Eli Lilly

(LLY) - Get Report

posted third-quarter earnings of 62 cents a share, in line with the 23-analyst estimate and up from the year-ago 46 cents.

MindSpring

(MSPG)

posted third-quarter earnings of 5 cents a share, 2 cents ahead of the nine-analyst estimate, but down from the year-ago 9 cents.

Nabors Industries

(NBR) - Get Report

posted third-quarter earnings of 4 cents a share, below the 17-analyst estimate of 5 cents and the year-ago 27 cents.

Schering-Plough

(SGP)

reported third-quarter earnings of 35 cents a share, in line with the 22-analyst estimate and up from the year-ago 29 cents.

Southdown

(SDW)

posted third-quarter earnings of $1.78 per share, missing the six-analyst estimate of $1.84 but up from the year-ago $1.70 a share.

Tellabs

(TLAB)

reported third-quarter earnings of 34 cents a share, a penny better than the 29-analyst estimate and up from the year-ago 23 cents.

Offerings and stock actions

Viacom

(VIA) - Get Report

is scuttling -- at least for now -- its plan to split off its

Blockbuster

(BBI) - Get Report

video-rental chain because of the poor performance of Blockbuster's stock and Viacom's proposed acquisition of

CBS

(CBS) - Get Report

,

The Wall Street Journal

reported.

Separately, Blockbuster posted third-quarter earnings of 14 cents a share, a penny better than the eight-analyst estimate and matching the year-ago report.

Analyst actions

Merrill Lynch

sliced its intermediate-term rating on

Bristol-Myers Squibb

(BMY) - Get Report

to accumulate from buy.

Credit Suisse First Boston

cut its rating on

Hormel Foods

(HRL) - Get Report

to hold from buy.

Merrill added

Tyco International

(TYC)

to its Focus One list as the top pick in its multi-industry category.

TSC

wrote about the recent controversy swirling around Tyco in a

story last week.

Merrill upgraded

United Technologies

to long-term buy.