(Updated from 9:54 a.m.)
With no new negative warnings accompanying the kickoff of the confession season's third week, stocks were basically flat this morning.
Dow Jones Industrial Average was trading lower by 9 points to 10,616; the
Nasdaq Composite Index was down about 8 points to 2021; and the
S&P 500 was off about 2 points to 1212.
Stocks aren't likely to get very far to the upside.
"I think we're going to have continuing slide that we've had," said Doug Myers, vice president of equity trading at
. "We're in a slow summer grind, which adds up to three yards and a cloud of pennies. We're not going to get very far, and we're not going to get very fast. Outside of a few highfliers like
, there's no urgency to get out there and buy," he said. The doughnut king was up 6.4% to $40.48 this morning.
Much of the early trading this morning was being driven by merger-related news. The leading U.S. beef company,
, was soaring 15.4% to $21.09 after a Delaware judge ruled on Friday that
must uphold its agreement to buy the company. In March, Tyson abandoned its deal to buy IBP for $3.2 billion, citing breaches to their merger agreement. Tyson was falling 17.4% to $9.40.
was falling 0.5% to $18.35 after it finalized a deal to acquire travel-reservations service
in a $2.9 billion cash-and-stock deal. Galileo investors liked the deal, sending it up 4% to $31.
But another corporate deal collapsed over the weekend: Talks broke down between
AOL Time Warner
, which means as it now stands AOL software won't be incorporated into the new Windows operating system. Both companies were trading lower by about 1% so far today.
Salomon Smith Barney
issued a cautious note on Microsoft, saying its June and September quarters may be at risk by 1 cent to 2 cents a share and a couple million dollars in revenue. The research firm cited weak capital spending and deterioration in Europe and Asia. On Friday, Microsoft declined to comment on rumors that it was going to miss its earnings targets. Still, Salomon reiterated its buy rating and $85 price target.
drama continues to play out. Honeywell's board meets today to consider its options after GE submitted its final offer to the European Commission on Thursday. That most recent proposal to divest some of Honeywell's business didn't the commission's demands to approval the deal. GE and Honeywell could withdraw their application for European antitrust approval or work out a last-minute compromise. Honeywell fell dramatically last week as prospects for approval dimmed. GE was lately off 0.$5 to $48.64; while Honeywell was down 1.7% to $38.06.
Investors will be watching intently for more
earnings preannouncements -- or warnings that profits won't meet targets. Wall Street has been betting on a reacceleration of earnings growth by the fourth quarter, but a spate of recent warnings is chipping away at that belief. If earnings outlooks continue to conflict with the optimistic scenario, investors could do more damage to stock prices.
"The key is if we have further preannouncements out of the technology sector," said Pat Dwyer, vice president of
. "People are trying to gauge what the recovery scenario looks like, and some are even starting to think that it could be as far out as the second quarter of 2002," he said. "I think people are resigned to the fact that tech is in retrenchment phase."
A flood of earnings confessions, including one from
on Friday morning, sent the Nasdaq down 8.4% last week -- its largest weekly percentage drop this year. The Dow slumped 3.2%, and the S&P 500 lost 4% for the week through Friday's close.
Wall Street will also keep an eye out for a couple of earnings reports today from companies whose fiscal quarters ended in May. Software giant
issues earnings today after the close of regular trading, and analysts are forecasting that it made earnings of 14 cents a share. In March, the company
warned that it wouldn't meet its previous guidance for the fourth quarter. At the time, analysts expected the company to earn 17 cents a share, but Oracle said its income would be flat with year-ago totals. Ahead of its report, Oracle was moving up 0.7% to $15.11 this morning.
Electronics manufacturing services company
also reports its most recent earnings today. The 26 analysts polled by earnings tracker
Thomson Financial/First Call
are expecting the company to earn 13 cents a share for the period. The company's stock was up 1.1% to $18.19 this morning..
Back to top
Bond prices were up this morning following Friday's release of data showing inflation creeping in more slowly than was forecast but manufacturing slowing down further than expected. The benchmark 10-year
Treasury note was up 6/32 to 98 12/32, yielding 5.215%. The 30-year note was up 2/32 at 95 24/32, yielding 5.672%.
Back to top
European markets were all lower in early trading this morning. London and Paris exchanges were losing ground, and Frankfurt lost its earlier footing in positive territory. London's
was down 23.1, or 0.4%, under pressure from oil, bank and tech stocks. The Paris
was losing 32.6 points, or 0.62%. Frankfurt's
was off 5.3, or 0.09%, after hitting a two-month low on Friday.
The euro was lately trading lower at $0.8594. The greenback was higher to 123.41 yen.
Asian markets closed lower overnight on continuing earnings jitters. Hong Kong's
fell 153.7 points, or 1.17%, to 12,948.8, to a two-month low. The blue-chip proxy was led down by weakness in China telecom operators. Tokyo's
lost 92.6 points, or 0.72%, to 12,697.8, amid weakness in techs and telcos but strength in banking stocks.
Back to top