By Steve Goldstein, MarketWatch
Jan 4, 2006
U.S. stock futures pointed to a pause on Wednesday after the Federal
Reserve-inspired rally from the previous session, while a decline in
crude-oil futures and an upgrade of Google Inc. helping to limit
profit-taking.
S&P 500 futures dipped 0.60 points at 1,274.10 but Nasdaq 100 futures were
up 1.5 points at 1,694.50. Dow industrials futures were down 12 points at
10,870.
On Tuesday, the Dow industrials climbed 129 points at 10,847, the Nasdaq
Composite jumped 38 points at 2,243 and the S&P 500 rose 20 points at
1,268, as federal funds futures moved to a level predicting only one more
rate hike following the release of Federal Open Market Committee minutes
from the December meeting. The gains came amid a turbulent session which saw
the Dow fall to as low as 10,684.
The dollar continued to drift lower against the euro, with the shared
currency recently at $1.2075, after the release of the Fed minutes.
The Nikkei 225 climbed 1.6% in a half-session, while European markets were
stronger as well.
The data schedule was light on Wednesday, with factory orders in November
seen growing 2.3%, according to economists polled by MarketWatch.
The volume of applications for mortgages slipped 1.5% in the week ended
Dec. 30 compared to the prior week, data from the Mortgage Bankers
Association show, while weekly chain store sales also is due to be
released.
Elsewhere, front-month crude oil futures slid 80 cents at $62.34 a barrel
after the Russia and the Ukraine agreed to settle their dispute over gas
prices in a complex accord.
Of companies in focus, Google Inc. shares edged up $3.32, or 0.8%, to
$438.55 in Instinet pre-open trading after it was upgraded to outperform
from peer perform at Bear Stearns, citing confidence in the Internet
search company's long-term fundamentals and the burgeoning "Google
ecosystem," which Analyst Robert Peck uses to describe Google's growing
interactive business community. Peck also raised his 2006 stock price
target to $550 from $360.
The stock had shot up $20.37, or 4.9% on Tuesday after Piper Jaffray upped
its price target to $600. Google also is expected to unveil this week a
$200 computer that won't use the Microsoft Corp. operating system and be
sold in Wal-Mart Stores: News, Quote) , The New York Post reported
Wednesday without attribution. The Los Angeles Times on Sunday first
reported speculation that Google may sell a cheap computer through
Wal-Mart, citing anonymous sources.
Dow component Exxon Mobil tacked on 29 cents, or 0.5%, to $58.76 in
Instinet after Banc of America Sec. upgraded the oil giant to buy from
neutral, citing relative valuation, continued strong returns on capital
employed and clarity on production growth.
Fellow Dow member Citigroup was downgraded by Banc of America, but the
shares were not very active in the pre-open.
Office Depot slumped $1, or 3.1%, to $31 after Goldman Sachs downgraded
the office supply retailer to in line from outperform, due primarily to
valuation.
Agrichemicals company Monsanto Co. gained 68 cents, or 0.9%, to $80.50 in
light trading in Instinet after the seed and agricultural chemicals
company reported fiscal first-quarter earnings $59 million, or 22 cents a
share, reversing a loss in the year-ago period of $40 million, or 15 cents
a share. Sales in the three months ended Nov. 30 rose 31% to $1.41 billion
from $1.07 billion. Analysts polled by Thomson First Call forecast
earnings, on average, of 19 cents a share and sales of $1.24 billion.
Automakers General Motors, Ford Motor Co. and DaimlerChrysler may be in
the spotlight on the release of December auto sales, expected later in the
session.
GM shares were unchanged at $18.90 in Instinet, after falling toward
23-year lows on Tuesday after Banc of America Securities pared its outlook
on health-care savings estimates.
Ford was last up 4 cents at $7.87 in Instinet, while DaimlerChrysler fell
90 cents to $52.85.
Drugmakers Pfizer, Schering-Plough and Merck & Co. may also move as
presentations are expected from all three at a Morgan Stanley conference.
International Coal Group may be affected by news that only one miner out
of 13 survived after a blast at one of its mines. The news comes after
relatives were initially told that twelve survived. Chief Executive Ben
Hatfield said in a press conference that the company never confirmed that
12 survived, which several media outlets reported. Hatfield said an incorrect
communication between the rescue team and the command center was overheard and
then spread throughout the media and family members via cell phone.
Broker calls
Both Citigroup and J.P. Morgan downgraded shares of Engelhard Corp.
following BASF's offer to buy the company for $4.9 billion. Neither broker
sees any rival bidders for Engelhard.
J.P. Morgan cut retailer Lowe's Companies to neutral from overweight,
citing a slowdown in home sales.
The E.W. Scripps Co. was upgraded to buy from neutral at Banc of America
Securities, with the broker citing increased visibility around cable
valuations and ratings and Scripps' online strategy.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
This is Thomson Financial's Market Commentary, which is issued three times
daily; Pre-Open ( 9:00 a.m.), Post-Open (10:15 a.m.), and Close (5:00
p.m.). The information herein is believed to be true and accurate. We
take no responsibility for inaccurate information and reserve the right to
update our reports. If you have any questions please e-mail James Sang at
james.sang@tfn.com or call 646.822.6233. For more information about
Thomson Financial visit us on-line at http://www.thomsonfinancial.com. For
more financial information at your fingertips, please visit
http://www.irchannel.com.
SOURCE Thomson Financial Corporate Group
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