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Markets remain on edge
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August 19, 1999: 6:50 a.m. ET
Traders await more economic data, plus retail and tech earnings
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NEW YORK (CNNfn) - Investors early Thursday hoped for a rebound on Wall Street, but nervousness about interest rates and the weakening dollar looked set to dominate the trading mood once again.
Early indications pointed to a flat opening for U.S. stocks.
S&P futures on the Globex exchange system edged up 0.40 point at 1,335.00. That's about 2 points beneath fair value for S&P futures -- a formula that takes into account interest and dividend effects -- which was estimated by London traders at 1,337.37. Typically, a point of difference between the futures index and fair value equals eight points on the Dow Jones industrial average as trading begins.
On Wednesday, the Dow industrials lost 125.70 points to 10,991.38, wiping out four days of gains amid fears about interest rates, inflation and a weakening dollar against the Japanese yen,. The tech-heavy Nasdaq composite -- which was helped a bit by a solid performance from Internet stocks -- still ended the day down 13.49 points at 2,657.73, while the S&P 500 was off 11.32 points at 1,332.84.
In Asia, most markets advanced Thursday, while Tokyo cut early losses sustained due to the sharp climb of the yen after reports of the possibility of a major banking deal. The Nikkei 225 in Japan closed down 12.5 points at 17,879.74 after losing more than 170 points at midday. Reports of merger talks between Fuji Bank, Industrial Bank of Japan and Dai-Ichi Kangyo Bank sparked an afternoon recovery. Such a deal would create the world's largest bank.
In Europe, bourses were mostly lower in midday trading Thursday following Wall Street's losses. The FTSE 100 in London lost 37.9 points, or 0.61 percent, to 6,163.9, while Frankfurt blue chips initially rallied, then fell after data on business confidence came in slightly ahead of expectations. The Xetra Dax slipped 32.42 points to 5,198.05.
In overnight trading in the Treasury market, the benchmark 30-year bond dropped 3/32 of a point in price, bringing up the yield to 6.01 percent, compared with 6.00 percent at Wednesday's close.
In the currency markets overnight, the dollar fell further against the strong Japanese yen, slipping 0.29 to 111.60, and stood at $1.0534 against the euro.
Wall Street is watching economic developments more closely than usual this week, ahead of the Federal Reserve's Aug. 24 meeting on the future of short-term U.S. interest rates.
The Commerce Department will release data early Thursday on the trade deficit, which is expected to narrow slightly to $20.5 billion, from $21.34 billion. Also, the Labor Department will report on weekly jobless claims, which are expected to grow to about 291,000 for the week ended Aug. 14, up from 284,000.
In the news, Exxon Corp. (XON) has suspended oil drilling in Russia amid an environmental and legal dispute with the Russian government, The Wall Street Journal reported. Exxon, one of the few major Western oil companies actively exploring in Russia, said it stopped drilling after the government failed to back its plan for an oil well at its $15 billion Sakhalin project in the Russian Far East. Shares in Exxon closed up 3/8 at 82-3/16 on Wednesday.
In the pharmaceutical sector, investors again will be keeping an eye on drug and agricultural products maker American Home Products (AHP), whose shares rose Wednesday amid speculation is in talks to merge with Britain's Glaxo Wellcome. American Home Products, whose stock has been battered amid corporate woes and a recent court ruling over a diet medication, gained 2-5/8 to 44-1/2. American depository receipts of Glaxo (GLX) added 3/8 to 52.
Meanwhile, Wal-Mart Stores Inc. (WMT) reportedly is consolidating its international operations, a move that could reduce operating costs overseas and position the company for expansion. The Wall Street Journal reported Thursday that Wal-Mart, the world's largest retailer, is combining some domestic and international operations, and some assignments will be moved abroad from the company's headquarters in Arkansas. Shares in Wal-Mart closed down 9/16 at 46-3/8.
Shares on online computer software retailer Onsale Inc. (ONSL) could see some action Thursday after the company gave a bullish outlook about revenue growth. The company predicted third-quarter revenue will grow by 8 to 10 percent from the second quarter and that fourth quarter revenue should rise 15 to 20 percent over third quarter totals. Onsale posted second-quarter revenue of $81.4 million. Shares in the company closed up 1-11/16 at 16-1/4 Wednesday.
A number of companies are slated to release earnings results Thursday.
Network software maker Novell Inc. (NOVL) is expected to post profit of 13 cents per diluted share for its fiscal third quarter, up from 7 cents in the year-earlier period. Ciena (CIEN), a fiber-optic telecommunications equipment maker, is expected to have lost a penny per share in its third quarter, compared with profit of 15 cents a year earlier.
In the retail sector, No. 1 bookseller Barnes & Noble Inc. (BKS) is expected to have earned 7 cents per share in the second quarter, compared with an 8-cent loss in the same three months last year. Rival Borders Group Inc. (BGP) is expected to have lost 3 cents per share in the second quarter, compared with earnings of 3 cents a year earlier.
Also, home furnishings retailer Bombay Co. (BBA) is expected to post second-quarter profit of a penny per share, compared with a loss of 1 cent a year ago.
Seagram Co. Ltd (VO), owner of Universal Studios, is expected to report a loss of 42 cents for its fiscal fourth quarter, compared with a profit of a penny a share a year ago.
Food manufacturer Hormel Foods Corp. (HRL) is expected to post third-quarter profits of 36 cents per diluted share, up from 28 cents a year earlier.
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