Today's Market: Earnings Malaise Pressuring Stocks in Early Going - TheStreet

Today's Market: Earnings Malaise Pressuring Stocks in Early Going

<LI>National Semi reports strong earnings.</LI><LI>DaimlerChrysler reduces offer for Mitsubishi.</LI>
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(Updated from 9:26 a.m.)

Investors are dragging down stocks in early action. The

Dow Jones Industrial Average fell 37 to 11,223 right after the open. The

Nasdaq Composite Index lost 27 to 4071. And the

S&P 500 moved 4 lower to 1498.

Wall Street is particularly worried now about slowing corporate earnings growth. The last few months of economic data have generally shown a slowing economy, and the season of earnings warning is fast approaching. Companies expecting to miss earnings estimates tend to warn right before quarterly earnings are released, or beginning in early October.

"This is part of the soft landing -- worries over corporate earnings. The parachute is out, and we're in the middle of the soft landing. But I've never seen in my young 40 years a soft landing work," said Doug Myers, vice president of equity trading at

IJL Wachovia

.

"I wish we weren't going to give up all gains we saw in August, but we might. It's probably natural. There isn't any particular news moving today's market," he said.

Investors may be afraid that rising crude oil prices will continue to bite into corporate profits. Chemical bellwether

DuPont

(DD) - Get Report

partly blamed oil costs for the profit warning it issued yesterday morning. The company cut its 2000 earnings per share estimates to $2.85 to $2.95 before items, from analyst forecasts of $3.01. DuPont was losing 1.2% in early trading.

Several profit warnings last night weren't helping, either.

TRW

(TRW)

, a manufacturer of automotive and spacecraft systems,

SpeedFam

(SFAM)

, semiconductor devices maker, and

Gadzoox

(ZOOK)

, a manufacturer of data storage devices, all warned they would miss estimates in the coming quarter.

Meanwhile, oil prices are slightly off their 10-year peak, but holding ground. There is continuing skepticism about whether these prices can continue to hold. OPEC yesterday said it plans to raise output by 700,000 barrels a day when it meets in Vienna on Sunday.

And investors continue to feel a little schizophrenic about where to put their money. After a substantial but steady run-up in tech stocks during August, the

Nasdaq gave up half of that month's 550 point gain on Monday and Tuesday, only to win back some 84 points yesterday. Technology stocks were also giving back some gains in after-hours trading last night.

National Semiconductor

(NSMA)

was leading gains among U.S. stocks trading in Europe before the open in the U.S. The company reported that its fiscal first-quarter net income tripled. It was down 0.7% in early going.

Other stocks looking to move higher this morning include

BroadVision

(BVSN) - Get Report

, which was rising in preopen action on news it had entered a deal with tech leader

IBM

(IBM) - Get Report

. Also,

Infocus

(INFS)

was rising in preopen action after Standard & Poor's said the data and video projectors maker would replace

Dexter

(DEX) - Get Report

in the S&P MidCap 400 Index on Thursday. Broadvision was up 0.7% early on. Infocus was jumping 6.4%.

Elsewhere in the news,

America Online

(AOL)

and

Time Warner

(TWX)

offered concessions to meet the European Union's concerns about competition in order to win approval for their merger, an EU spokeswoman said.

EMI

(EMI)

, on the other hand, has not yet formally made proposals about concessions for the EMI-Warner Music deal.

DaimlerChrysler

(DCX)

plans to pay 10% less than it had originally planned into

Mitsubishi

and named a new COO. It would now have a 34% stake. Daimler Chrysler said it would oppose a bigger Mitsubishi stake for Volvo, meanwhile.

TheStreet.com

wrote about this in a separate

story.

Campbell Soup

(CPB) - Get Report

net income dropped 25% in the fiscal fourth quarter, and the soup company immortalized by Andy Warhol warned that results for the current period won't meet estimates. The stock was down 2% early this morning.

And still no word from U.S. brokerage

J.P. Morgan

(JPM) - Get Report

or Germany's

Deutsche Bank

about whether there's truth to rumors of a deal between the two. Dow component J.P. Morgan surged 5% Wednesday on merger speculation, but it fell back yesterday.

TheStreet.com

took a look at what sent J.P. Morgan's

stock soaring earlier this week. Morgan was slipping 0.4% this morning.

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Bonds/Economy

The 10-year Treasury note was lately up 3/32 from Thursday's close at 100 2/32, and yielding 5.739%. Treasuries fell for the third session in a row yesterday as investors reacted to rising oil prices and the upcoming heavy issuance of corporate bonds.

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International

European markets were trading lower at midsession.

After pushing tentatively higher at the open, the

FTSE 100

turned tail as investors began taking profits in the index's two big oil stocks. The FTSE was lately down 51.80 to 6637.40.

Across the channel, the

CAC 40

in Paris was off 44 to 6790, and the

Xetra Dax

in Frankfurt was off 41.21 to 7332.13.

The euro was lately trading lower at $0.8727.

TheStreet.com

wrote a separate piece looking at the

euro's woes .

Techs were partly responsible for turning around 2 days of losses in

Tokyo overnight, but backhanded Hong Kong's

Hang Seng

, which ended lower.

Despite a downgrade from

Moody's Investors Services

on Japan's sovereign debt rating for the second time in two years, investors scooped up large-cap electronic shares ahead of the fiscal first-half earnings season. The

Nikkei 225

index gained 201.09, or 1.2%, to close at 16,501.55.

TheStreet.com

wrote about he Moody's downgrade in a

separate story .

With the euro struggling to gain ground, most Tokyo currency dealers were busy adjusting positions in euro/dollar positions and ignored the news from Moody's. The greenback fell against the yen to fetch 105.43 in Tokyo trading. The dollar was lately trading at 105.64 yen.

Traders and investors looked like they took the day off in Hong Kong, with the key

Hang Seng

index falling 156.50 to close at 17,275.45 amid extremely thin trading.

Back to top

Bonds/Economy

The 10-year Treasury note was lately up 3/32 at 100 2/32, and yielding 5.741%. Treasuries fell for the third session in a row yesterday as investors reacted to rising oil prices and the upcoming heavy issuance of corporate bonds.

Back to top

International

European markets were trading lower at midsession.

After pushing tentatively higher at the open, the

FTSE 100

turned tail as investors began taking profits in the index's two big oil stocks. The FTSE was lately down 80.90 to 6608.30.

Across the channel, the

CAC 40

in Paris was off 79.73 to 6754.73, and the

Xetra Dax

in Frankfurt was off 65.31 to 7308.03.

The euro was lately trading lower at $0.8727.

TheStreet.com

wrote a separate piece about the

euro's woes.

Techs were partly responsible for turning around two days of losses in

Tokyo overnight, but they backhanded Hong Kong's

Hang Seng

, which ended lower.

Despite a downgrade from

Moody's Investors Services

on Japan's sovereign debt rating for the second time in two years, investors scooped up large-cap electronic shares ahead of the fiscal first-half earnings season. The

Nikkei 225

index gained 201.09, or 1.2%, to close at 16,501.55.

TheStreet.com

wrote about the Moody's downgrade in a

separate story .

With the euro struggling to gain ground, most Tokyo currency dealers were busy adjusting positions in euro/dollar positions, so they ignored the news from Moody's. The greenback fell against the yen to fetch 105.43 in Tokyo trading. The dollar was lately trading at 105.64 yen.

Traders and investors looked like they took the day off in Hong Kong, with the key

Hang Seng

index falling 156.50 to close at 17,275.45 amid extremely thin trading.

Back to top