NEW YORK (CNNfn) - U.S. stocks were primed to open fairly flat as investors struggled to make sense of the market's inability to absorb positive economic news and maintain a substantial rally.
A better-than-expected productivity report failed to give futures much of a boost.
On Tuesday, the markets looked set to post significant gains after the National Association of Purchasing Management's report on August manufacturing came in a lot stronger than expected. But investors reconsidered, particularly in light of concerns about the proposed $25 billion acquisition of Compaq Computer by rival PC maker Hewlett-Packard, and sold tech issues.
A more than 200-point gain for the Dow Jones industrial average dissolved, and a modest Nasdaq composite index advance evaporated -- another sign that investors remain jittery about the economy and corporate results.
"We have a lot of wood to chop before the equity market can get out of its grand funk," Allen Sinai, chief global economist at Decision Economics, told CNN's Lou Dobbs Moneyline Tuesday. "And you know, actually my concern is we're going to test the old lows."
The Nasdaq composite index stands at 1,770.78 following Tuesday's 1.9 percent dip. The Dow Jones industrial average starts the day less than 3 points shy of 10,000, at 9,997.49, after a nearly 48-point gain while the S&P 500 is at 1,132.94 after losing less than a point.
Asian stocks closed mostly lower Wednesday, reflecting the tech selloff in the United States. European markets opened with declines.
Treasurys advanced after a sharp decline Tuesday. The 10-year note yield slipped to 4.96 percent from 4.97 percent late Tuesday, while the 30-year bond yield slid to 5.47 percent from 5.49 percent.
The dollar gained ground against the yen but slipped versus the euro. Brent oil futures dropped 10 cents to $26.16 a barrel in London.
The government reported its revised report on second-quarter productivity before trading began. The quarterly rate was lowered to 2.1 percent from the originally reported 2.5 percent, beating expectations of 2.0 percent, according to economists surveyed by Briefing.com.
Telecom equipment maker Alcatel (ALA: Research, Estimates) slipped $1.20 to $13.50 in pre-market trading after the company warned it may not be able to deliver an operating profit in 2001.
A trio of analysts weighed down Swedish telecommunications equipment maker Ericsson (ERICY: Research, Estimates) one day after the company gave a gloomy outlook for 2002. The company's American depositary shares slipped 16 cents to $3.85 in before-hours trading.
Speaking at a Tokyo seminar a day after the announcement of the computer industry's biggest merger, Cisco Systems (CSCO: Research, Estimates) CEO John Chambers said that in the current environment, the Compaq-Hewlett-Packard merger will probably be just one step in a rapid consolidation in the computer industry. Cisco shares fell 13 cents to $15.64 in before-hours trading Wednesday.
Rival media powers AOL Time Warner (AOL: Research, Estimates) and News Corp. (NWS: Research, Estimates) have separately confirmed negotiations with the Chinese government to increase broadcast access to the world's most populous nation. Shares of AOL, the parent of CNNfn, rose 15 cents Tuesday to $37.50, while News Corp.'s American depositary shares gained 31 cents to $32.90. 
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