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Dow to eye Nets & techs
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January 12, 1999: 7:28 a.m. ET
Reports due from Intel, Yahoo! and others keep Wall Street watching
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NEW YORK (CNNfn) - With several key earnings reports looming Wall Street will eye high-tech stocks and the frenzied Internet sector when the market opens Tuesday.
Quarterly reports from are due from Broadcast.com Inc. (BCST) and Yahoo! Inc. (YHOO). Broadcast.com closed up 87-9/16 at 285-1/16 Monday, while Yahoo! closed 70-7/8 at 414-1/2.
Also due out late Tuesday are reports from high tech heavyweights Intel Corp. (INTC) and Seagate Technology Inc. (SEG). Although the reports are due out after the close of trading, investor attention is still expected to be focused in the area as anticipation about the Intel announcement, expected to signal profit trends for the entire high-tech sector, builds. Intel closed up 10-1/16 at 139-3/4 Monday, while Seagate closed up 11/16 at 38-1/16.
"Intel by itself is being powered by very good earnings progression, very good gross margins, and all that is helped by the spreading use of the Internet. But I think Internet stocks and Intel are a world apart," said Vince Farrell, chief investment officer at Spears, Benzak, Salomon & Farrell, on CNNfn's "Business Day."
The Dow Jones industrial average fell 23.43 points to 9,619.89 Monday. On the New York Stock Exchange, declines trounced advances 1,958 to 1,110, as trading volume rose to 816 million shares Weakness in the blue-chip index was blamed on profit taking after a week of solid gains, as well as a continuing slide in the dollar against the Japanese yen.
The Nasdaq composite index, however, scoring its seventh record high in a row, rocketed 40.18 points, or 1.7 percent, to 2,384.59. The S&P 500 index slumped 11.21 to 1,263.88.
The S&P futures index was trading within a point of the zero mark early Tuesday, typically indicating a quiet market opening. (Click here for the latest S&P futures quote)
The benchmark 30-Treasury bond was up 15/32 for a yield of 5.272 percent.
In company news, the Cheesecake Factory Inc. (CAKE) reported fourth quarter profits will miss analysts' expectations of 21 cents per share. The restaurateur expects diluted earnings per share to fall between 14 cents and 16 cents, compared with 16 cents per share for the same period last year. The Cheesecake Factory rose 25/32 before trading was halted.
In another earnings disappointment, ESC Medical Systems Ltd. (ESCMF) announced that fourth-quarter operating results would be adversely affected by a slowdown in the U.S. aesthetic market, specifically in the area of hair removal. The company, which retails laser products for hair removal and skin care, said fourth-quarter revenue will total $50 million. ESC plans to implement steps to improve efficiencies and expects benefits by the second half of 1999. ESC fell 1/4 to 10.
Interlink Computer Sciences Inc. (INLK) also said revenue and earnings for the second quarter ended Dec. 31 will be below expectations. The company expects a loss from operations of $1.9 million in the quarter, excluding one-time charges and gains. Interlink blamed a slow rate of closure of license revenue and said it expects to take a one-time charge of as much as $2 million to exit its Netlock security software business. Interlink rose 1/16 to 3-3/4.
Overseas, in the Asian markets, the Bank of Japan intervened to prop up the dollar, reversing the yen's climb against the U.S. currency. The move helped support shares in Tokyo which closed barely changed Tuesday after a volatile morning session. The Nikkei 225 average finished down 7.51 points or 0.06 percent at 13,360.97. The dollar retained a firm tone above 111 yen, up nearly three yen after the BoJ reportedly stepped in and bought dollars. It was the first time the bank had bought the U.S. currency since August 1995.
European bourses searched for a lead in trading early Tuesday. The major indexes traded in a narrow range, appearing unlikely to make a strong move either way.
A flat performance in Tokyo overnight and a mildly lower close in New York Monday gave European markets little impetus. The dollar staged a recovery against the yen, climbing off its lows to touch 112 yen, but there was little sign that European investors were prepared to take hefty bets on the dollar earners such as exporters.
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