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Tech-wreck at the open?
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February 17, 1999: 7:21 a.m. ET
Jitters over earnings, valuations, after Dell, HP reports could spark selling
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NEW YORK (CNNfn) - Wall Street could face a rough ride early Wednesday as investors digest earnings from two big tech companies reported after the close Tuesday.
Dell Computer and Hewlett Packard raised fears about stock prices relative to earnings when they reported profits late Tuesday that met or exceeded forecasts, but signalled disappointing revenue growth.
Sluggish sales could point to weaker earnings growth ahead - a big worry for investors paying 60 or 70 times earnings for tech stocks.
And lately, as go the tech stocks so goes the broader market.
"Techs are going to have a rough ride this morning and since tech has affected the whole market all year it will affect it today, and that's not good news," said Robert Doll, money manager at Oppenheimer Funds, on CNNfn's "Business Day."
Weakness in stock markets overseas could also fuel early selling on Wall Street.
S&P futures on the Globex exchange system were off about 8 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)
Unable to sustain an early rally, tech stocks fell Tuesday, pulling the Nasdaq composite index, dominated by big tech issues, down 8 to 2,314. The Dow gave back a 112-point gain to end 22 points higher at 9,297.
In addition to Dell and Hewlett Packard, other tech stocks to watch Wednesday will be America Online and eBay. The Wall Street Journal reported that the nation's biggest online service provider and the Internet auction house were in talks about a link, including AOL possibly buying a minority stake in eBay.
Dell fell 1-1/8 to 88-3/4 but fell as low as 77 in after-hours trading Tuesday, after tumbling 12 points Friday. Financial markets were closed Monday for Presidents Day.
Hewlett Packard fell 5-15/16 to 70-1/2. AOL rose 1 to 159-1/2 while eBay slid 4-7/8 to 231-1/8 as other Internet stocks also tumbled.
Other tech stocks to watch Wednesday include Analog Devices, a circuit maker that is due to report earnings. Wall Street expects profits of 17 cents a share, according to First Call, which tracks analysts' estimates. Analog rose 5/16 to 30-7/8 Tuesday.
Among other issues, BP Amoco Plc is also due to report, with investors expecting profits of 52 cents a share, excluding charges, which are expected from the giant oil company. BP Amoco's U.S. shares fell 7/8 to 82-1/4.
The bond market won't lend any support in early trading. The 30-year Treasury fell $3.75 per $1,000 of face value in London, pushing its yield back up to 5.36 percent.
The dollar was mixed in Asia and Europe.
On the economic front, investors will be watching for reports on January housing starts, which are expected to have slipped a bit, and industrial production, also for January, where forecasts call for slower growth of 0.1 percent, down from 0.2 percent in December.
Stocks fell 0.5 percent in Tokyo after four straight up sessions. Stocks were weaker across most of Europe as well. Britain's leading stock index fell 0.9 percent while stocks in Germany tumbled 1.8 percent.
The dollar fell to $1.1234 per euro from $1.1187 late Tuesday but extended its gains against the Japanese yen, rising to 118.75 yen, near its 10-week high of 118.90 yen reached in Asian trading. 
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