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Wall Street eyes techs
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November 24, 1999: 6:59 a.m. ET
Favorable earnings may rekindle sector in pre-Thanksgiving session
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NEW YORK (CNNfn) - Investors will likely turn their attention to technology stocks Wednesday after favorable earnings reports from two high-tech leaders rekindle interest on Wall Street.
Early indications suggest stocks will open moderately higher in what is expected to be a quiet, pre-holiday session.
S&P futures on the Globex trading system were down 1.60 points at 1410.40. But that's 1.89 points above fair value for the futures -- a formula taking into account interest and dividend effects -- which was estimated by London traders at 1410.40. Typically, one point of difference between the futures index and fair value equals about eight points on the Dow Jones average as trading opens.
On Tuesday, the Dow industrials fell 93.89 points to 10,995.63. The Nasdaq composite lost 49.69 points, or 1.5 percent, to 3,342.87, and the S&P 500 index slipped 16.30 points, or 1.15 percent, to 1,404.64.
In Asia Wednesday, Tokyo bucked the losing trend as technology and telecom stocks kept the region's largest market in positive territory. Almost every other market headed lower, taking Wall Street's lead. The Nikkei 225 index closed 74 points higher at 18,896.21.
Europe's main markets were higher Wednesday morning, with Paris posting the biggest gains. The CAC 40 index rose nearly 1 percent, or 50 points, to 5,202.43. In London, the FTSE 100 was flat at 6,534.50. Frankfurt's Xetra Dax was up 25 points at 5,839.18.
In the currency markets overnight, the dollar strengthened against the yen, rising to 104.48 yen from 104.14 yen Tuesday. The dollar strengthened against the euro, which fell to $1.0232 after ending Tuesday at $1.0270.
Overnight in the Treasury market, the benchmark 30-year bond dropped 4/32 of a point in price, raising the yield to 6.20 percent, compared with a closing yield of 6.19 percent in the prior session.
Technology stocks could garner some attention on Wall Street Wednesday in the wake of generally favorable earnings reports from Intuit and Novell late Tuesday.
Intuit reported a fiscal first-quarter loss narrower than expectations. For the quarter ended Oct. 31, the Mountain View, Calif.-based personal software maker recorded a pro-forma loss of $22.6 million, or 12 cents a share, compared to $26.8 million, or 15 cents a share, a year earlier. Analysts polled by First Call expected Intuit (INTU) to lose 19 cents a share.
Intuit shares ended Tuesday up 2-3/16 at 44-1/16.
Novell posted fiscal fourth-quarter earnings that were in line with expectations, with the company's chief executive saying he sees a "significant growth opportunity" for the company moving into fiscal 2000.
The Provo, Utah, company, which makes networking software, said net income for the quarter ended Oct. 31 rose to $74 million, or 21 cents a share, from $42 million, or 12 cents, in the year-earlier period. Excluding a gain from a tax settlement, Novell earned 17 cents a share, matching the average estimate of analysts polled by First Call.
Novell shares fell 1-11/16 Tuesday to 22.
International Business Machines Corp. (IBM) could also grab some of the spotlight after the Wall Street Journal reported that the world's largest computer maker may have an accounting strategy that makes it look more efficient. Accounting watchdog Howard Schilit, who runs the Center for Financial Research and Analysis in Rockville, Md., said in a report that IBM's practice of bundling one-time gains and other non-operating activities into operating income makes it difficult to evaluate the company's financial performance.
IBM shares fell 1-27/32 Tuesday to 106-1/32.
In other earnings news, Petsmart Inc. (PETM) reported a third-quarter profit in line with analysts' expectations. The Phoenix-based retailer posted income of $2.9 million, or 3 cents a share, excluding its equity in the loss of Petsmart.com and related income tax effects. That compared to $5.3 million, or 5 cents a share a year ago.
At Tuesday's close, Petsmart shares were down 1/8 to 4-9/16. In after-hours trade, the company's shares declined an additional 9/16 to 4.
American Home Products (AHP) and other drug companies could foster some attention Wednesday after a federal judge gave preliminary approval to the company's $3.75 billion settlement with individuals who took the diet drugs Redux or Pondimin, better known as "Fen Phen."
U.S. District Court Judge Louis Bechtle signed off on the settlement, reached in October. AHP will now enter a 120-day public notice period beginning Dec. 1, during which time thousands of claimants can decide whether to accept the deal.
And insurance stocks could get a lift after Metropolitan Life Insurance Co., the second-largest life insurer, filed to raise as much as $6.5 billion in what could be the largest initial public offering in U.S. history.
The New York-based life insurer said it plans to sell 225 million shares, or a 31 percent ownership stake, to the public in a projected range of $14 to $24 a share. Policyholders will receive the remaining 576 million shares as part of the company's plan to reorganize from a mutual life insurance company to a stock life insurance company.
United Parcel Service's (UPS) $5.5 billion offering completed earlier this month is currently the largest on record.
Both Time Warner (TWX) and General Electric (GE) could see some activity Wednesday following speculation that GE had offered to sell its NBC television network to Time Warner Inc. Both companies denied the rumors, which began after Rupert Murdoch, the chairman of News Corp., told Fox News Channel that GE was offering to sell NBC to Time Warner for $25 billion.
Finally, TV Guide Inc. (TVGIA)'s stock could see some activity after the company announced a two-for-one stock split Tuesday that will affect both its Class A and Class B common shares. The split will occur on Dec. 17 in the form of a stock dividend for shareholders of record as of Dec. 3. This will be the third two-for-one split for TV Guide since it went public in 1996.
TV Guide's Class A shares rose 3/16 Tuesday to 59-7/16. In after-hours trade, the company's stock surged 3-9/16 to 63.
On the economic front, the Commerce Department will release its first revision of its tally of third-quarter growth. Analysts expect the economy expanded at a 5 percent pace in the third quarter, slightly more than the initial 4.8 percent pace initially calculated. The GDP price deflator, a gauge of inflation, is expected to have remained at 0.9 percent.
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