By Steve Goldstein, MarketWatch
Jan 6, 2006
LONDON (MarketWatch) -- U.S. stock futures showed little movement Friday
ahead of a key payrolls report, with technology giants International
Business Machines and Microsoft Corp. in the spotlight after Big Blue
unveiled plans to freeze its pension program and after Microsoft Corp. was
downgraded by a leading broker.
S&P 500 futures rose 0.2 of a point at 1,281.50 and Nasdaq 100 futures
rose 0.5 points at 1,723.50.
On Thursday, the Nasdaq Composite jumped 13 points to 2,276 to reach a new
four-and-a-half-year high, while the Dow industrials rose 2 points at
10,882 and the S&P 500 edged up 0.02 points at 1,273.
The flat performance by broader stock markets came ahead of Friday's
release of nonfarm payrolls, which likely grew by about 207,000 in
December after a 215,000 gain in November, according to a survey of
economists conducted by MarketWatch. The unemployment rate likely remained
at 5%, with an outside chance of a decline to 4.9%.
Analysts said the always-scrutinized figures have added importance this
month because the Federal Reserve has said it will base future
interest-rate decisions on incoming economic data after removing the
"accommodative" tag to describe its rate stance.
The dollar advanced slightly on the yen and the euro ahead of those
figures, due at 8:30 a.m. Eastern.
Elsewhere, front-month crude oil contracts rose 45 cents at $63.24 a
barrel and natural-gas futures rose 29.6 cents at $9.795 per million
British thermal units in electronic trade. Metals commodities were mixed
with gold futures up slightly while copper contracts declines.
Of companies in focus, shares of IBM edged up 18 cents to $82.68 in
Frankfurt after it announced it would be freezing its U.S. pension plan,
starting in 2008. The move marks yet another nail in the coffin of defined
benefit plans.
Microsoft Corp. was downgraded by Credit Suisse First Boston to neutral
from outperform, with the broker saying the stock only is 10% shy of its
price target. "Microsoft could still serve as a nice hedge against
near-term volatility in the market, however we find other software stocks
as offering greater long-term growth potential," the broker said.
Starbucks reported after Thursday's close a 7% same-store sales rise for
December, at the upper end of the coffee chain's targeted range.
Technology consultant Accenture Ltd may rise after reporting stronger
earnings and revenue in the fiscal first quarter than forecast. The news
lifted shares of European rivals including Capgemini.
Europe stock markets more broadly traded in a narrow range before payrolls
data, while the Nikkei 225 in Tokyo ended flat and the South Korean stock
market index hit a new all-time high.
Broker calls
J.P. Morgan upgraded Yum Brands, the restaurant group that includes Pizza
Hut and KFC, to overweight from neutral. J.P. Morgan noted that concerns
over the company's China operations, including an ingredient recall last
year, which have kept shares range-bound for a year, have passed. It added
that solid U.S. performance and a benign cost environment should also help
the company.
Merrill Lynch downgraded telecoms equipment maker Tellabs Inc to neutral
from buy, noting that Tellabs is trading at 19.2 times Merrill's 2007
earnings estimates, leaving limited upside.
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
back to top
