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Techs, rates to drive stocks
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February 16, 1999: 7:15 a.m. ET
Wall Street to eye tech issues, interest rates, after holiday weekend
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NEW YORK (CNNfn) - Tech stocks and interest rates will take center trading-screen as Wall Street reopens for business Tuesday after a three-day holiday weekend.
While blue-chips managed to end little changed last week, tech issues tumbled Friday, capping a roller coaster ride that has many investors on edge. Some market strategists said that could continue Tuesday.
Investors are concerned about valuations in the technology sector after Dell Computer's stock got hammered Friday on worries that sales growth is slowing at the world's biggest direct marketer of personal computers.
Pulled down by the weakness in Dell and other tech stocks, the Nasdaq composite index, heavily weighted with high-tech issues, fell 3.5 percent Friday, capping a 2.2 percent drop for the week. The Nasdaq is still up about 5 percent so far this year.
Blue-chip stocks, which edged down 0.3 percent last week on the Dow, may be set to open higher, given a lift by markets overseas. S&P futures on the Globex exchange system were up about 3 points in early trade. Usually one point on the futures index equals eight points on the Dow as trading begins.
(Click here for the latest S&P futures quote)
U.S. financial markets were closed for Presidents Day Monday.
Stocks rose 1.3 percent in Tokyo Tuesday after the government said it will limit the amount of bonds it issues, which drove bond-market interest rates lower. A sharp rise in Japanese rates last week had fueled a jump in the yen and hurt the U.S. bond market, driving yields in the United States to their highest since August.
The dollar recovered in Asia and Europe, rising more than 3 yen to 117.43 Japanese yen.
Stocks rose across most of Europe.
In the tech sector, all eyes will be on Dell (DELL), which is due to report earnings late Tuesday. Analysts expect Dell to meet forecasts of 31 cents a share, but are concerned that growing competition could dent sales growth.
Some analysts said weak sales at Dell could point to a broader slowdown in PC sales, which would be a big negative for computer makers, chip companies and a host of other tech stocks. Dell fell 12 to 89-7/8 Friday.
Another big tech name due to report is Hewlett-Packard (HWP), which is forecast to earn 83 cents a share for the latest quarter vs. 86 cents a year earlier. HWP rose 1-3/16 to 76-7/16 in Friday's session.
Applied Materials (AMAT) - the biggest maker of equipment used by chip makers such as Intel (INTC) - is also reporting, with analysts forecasting profits of 6 cents a share, according to First Call, which tracks forecasts. Applied Materials stock fell 3-1/6 to 66-7/8.
Two other stocks to watch will be Ameritech Corp. and SBC Communications Inc., the regional Bell telephone companies that have announced a $56 billion merger. The companies said Monday they would make a major announcement Tuesday. SBC lost 1-7/16 to 50-13/16 while Ameritech fell 2-1/8 to 60-15/16 in Friday's trading.
Among other issues in the news, Wal-Mart Stores (WMT), the world's biggest retailer, is due to report earnings, and pilots at AMR Corp.'s (AMR) American Airlines unit began returning to work after a nine-day sickout forced thousands of flight cancellations that disrupted plans for tens of thousands of travelers.
Wal-Mart fell 1-7/16 to 84-3/8 while AMR fell 5/16 to 55-1/8.
Meanwhile, investors will keep half an eye on interest rates this week after the yield on the 30-year Treasury bond jumped to 5.42 percent Friday, the highest since August, pressured by new supply and worries about rising rates overseas.
While Wall Street welcomed Federal Reserve Chairman Alan Greenspan's comments about bank reform last week - and his lack of reference to the need for higher short-term rates - many remain concerned the Fed may change its bias toward raising rates later this year.
The central bank cut short-term rates three times late last year in a bid to stimulate the economy and insulate it from turmoil overseas.
Elsewhere, some traders expect action in Nextel Communications (NXTL) this week, after the wireless company agreed to sell 2,000 of its communications towers for $560 million last week - a move some speculate may make Nextel a more tempting takeover target. Nextel lost ¼ to 31-7/8 Friday.
Overseas, Tokyo's Nikkei average rose 177.92 to 14,232.64, a gain of 1.3 percent, while Britain's FTSE 100 was up 72.5, or 1.2 percent, at 6,023.20. 
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