By Steve Goldstein, MarketWatch
Jan 5, 2006
U.S. stock futures pointed to a steady start Thursday after fresh four-
and-a-half year highs, with investors eyeing a mixed performance from the
retail sector and a report that talks are again underway for a possible multi-
billion dollar bid for Computer Sciences Corp.
S&P 500 futures were recently down 1.8 points at 1,278.70 and Nasdaq 100
futures were off 1.5 points at 1,711.5. On Wednesday, Dow industrials rose
32.7 points at 10,880, the Nasdaq Composite rose 19 points at 2,263 and the
S&P 500 rose 4.6 points at 1,273, as investors continued to buy stocks after
minutes from the Federal Reserve pointed to an easing off the interest-rate
hike pedal.
Retailers were expected to draw scrutiny Thursday with the release of
monthly sales figures. Teen apparel retailers are expected to show the best
growth but other clothing retailers seen struggling. Investors will also be
eyeing the depth of discounts in the last days of the holiday shopping season.
Wal-Mart Stores, the world's largest retailer, declined 0.8% in pre-open
trade after confirming that December same-store sales rose 2.2% and saying
that fourth-quarter earnings should come in at the low end of its previously
forecast range.
Of other retailers, JoS. A Bank Clothiers said December comparable stores
sales climbed 20.7%, compared to estimates for just a 6% same-store rise.
Aeropostale Inc., Men's Wearhouse and American Eagle Outfitters also topped
estimates in sales results announced late Wednesday. On the downside, Pier 1
Imports Inc. said comparable-store sales for the five-week period ended Dec.
31 fell 4.8%, Sears Holdings said Sears domestic same-store sales dropped 12%
though Kmart location same-store sales rose 1%, and Sharper Image reported a
worse-than-forecast 15% decline in December same-store sales.
On the economic front, the poll of the non-manufacturing sector is
expected to rise to 58.9 in December from 58.5 in November. Weekly jobless
claims figures also will be unveiled.
The dollar largely held to weeklong lows against the euro and the yen,
with some further positive European economic data also underpinning the shared
currency.
Front-month crude oil contracts were recently down 5 cents at $63.37 a
barrel in electronic trade, ahead of data likely to show a decline in weekly
U.S. crude inventories. Natural-gas futures fell 26.7 cents at $9.93 per
million British thermal units, amid recent warm weather in the U.S.
Elsewhere, Blackstone Group and Hewlett-Packard Co. are mulling a buyout
of Computer Sciences Corp., The Wall Street Journal reported Thursday, citing
people familiar with the situation. Computer Sciences climbed over 7% to
$54.70 in pre-open trade.
The same newspaper reported that Google Inc. is expected to unveil an
expanded video downloading service on Friday.
Xilinx gained over 7% after the chipmaker boosted sales guidance for the
second time in a month.
Also in the tech arena, Rambus shares rallied over 12% in pre-open deals
after the company said a judge rejected a motion to discuss its lawsuit
against Hynix.
Overseas, European stock markets paused after week-long gains, while Asia
markets continued to advance. Israeli stocks sold off following the
hospitalization of Prime Minister Ariel Sharon for a "serious" stroke.
Broker calls
Bank of America downgraded The Boeing Co. to neutral from buy, citing
valuation. Analyst Nick Fothergill also cut his price target on the company by
$1 to $72. Fothergill said further upside to the stock appears limited, after
a strong run in the shares since March 2003. Also, the broker's latest
aircraft orders survey suggests a 50% drop in orders in 2006 while its supply
chain survey shows increasing risk in raw material price inflation and a risk
of component shortages.
Deutsche Bank upgraded Cablevision Systems Corp. to buy from hold, citing
the company's strong operating position and significant discount to asset
value. The broker told clients that the "seemingly never-ending Dolan drama,"
while disconcerting, has created an excellent entry point for investors with a
tough stomach.
Lehman Brothers upgraded JDS Uniphase, a maker of broadband optical
equipment, to equal-weight from underweight, citing an improving fundamental
outlook. The broker told clients it believes the worst is behind and its
checks suggest an improving communications business for the first time in five
years.
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
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SOURCE Thomson Financial Corporate Group
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