By Steve Goldstein, MarketWatch
Jan 9, 2006
U.S. stock futures edged slightly lower Monday after last week's rise,
with International Business Machines and Amazon.com downgraded and Vice
President Dick Cheney hospitalized, though downside was limited after upgrades
to technology bellwether Cisco Systems and Dow industrials components General
Motors and J.P. Morgan Chase.
S&P 500 futures recently were down 1.10 points at 1,290.70, while Cisco's
upgraded helped lift Nasdaq 100 futures by 1.0 point to 1,749.0. Dow
industrials futures dipped 5 points to 10,993. On Friday, hopes that the
Federal Reserve wouldn't find inflationary signs from weaker-than-forecast
payrolls growth lifted Dow industrials 77.2 points to 10,959, the Nasdaq
Composite up 28.8 points at 2,305 and the S&P 500 up nearly 12 points at
1,285. All three indexes closed at 4 1/2-year highs.
The impact from the jobs data continued to resonate on Monday, when the
dollar reached lows against the yen not seen since late October, with the
greenback worth as low as 113.75 yen, and spot gold hit a 25-year high in
Asian trade overnight at $544.30 an ounce. News that Cheney was admitted to a
U.S. hospital for shortness of breath may have weighed on sentiment, but
didn't have much of an initial impact on currencies or stock market futures.
Front-month crude oil futures rose 29 cents at $64.50 a barrel.
Overseas, European stock markets built on multi-year highs, with automaker
DaimlerChrysler rising on a report it's hired Goldman Sachs to field offers
for its loss-making Smart car division, while markets in Tokyo were closed for
a holiday.
Back in the U.S., there were several broker calls on prominent companies,
including, which was downgraded to neutral from overweight at J.P. Morgan,
with the broker citing risks in services and hardware. The Dow member's stock
eased 1.1% to $84 in Instinet pre-open trading.
Fellow Dow component General Motors rose 4.3% to $21.70 after it was
upgraded to in line from underperform at Goldman Sachs due to valuation, given
Analyst Robert Barry's belief that a Chapter 11 bankruptcy filing by the
automaker is very unlikely in the near term. Barry thinks GM's long-term
fundamentals are still negative, due to revenue and cost pressures related to
market share losses and labor costs, but he also believes there are potential
catalysts that could improve sentiment and ease bankruptcy fears enough to get
the stock to bounce to the mid-$20s during the first half of 2006.
Also on the plus side, Prudential Equity Group upgraded Merrill Lynch to
overweight from neutral weight and Dow component J.P. Morgan Chase to neutral
weight from underweight on increased capital markets activity and revenue
growth prospects. J.P. Morgan Chase shares tacked on 23 cents, or 0.6%, to
$40.25 in Instinet.
The tech sector also drew key ratings calls. J.P. Morgan downgraded
Amazon.com to underweight from neutral, citing concerns that U.S. growth will
continue to be below that of the broader electronic commerce market. The stock
slumped 2.2% to $46.80 in Instinet.
Cisco Systems rose over 1.5% in pre-open trades to $19.05 after Prudential
upped it to overweight from neutral, on second-half sales growth hopes. The
stock closed at a 5-month high on Friday.
In deal news, Boston Scientific formalized its $25 billion offer for
Guidant Corp. over the weekend, offering $36 in cash and $36 in stock for the
medical device maker. That gave Guidant shares a 2.2% lift to $68.80. Boston
Scientific also said it would sell Guidant's vascular intervention and
endovascular businesses to fellow medical device maker Abbott Laboratories for
$4.3 billion. It separately said sales for the year will be around $6.28
billion, compared to the $6.32 billion estimated by analysts.
Tyco International is considering a plan that would split off from the $60
billion conglomerate both its electronics and health-care businesses in tax-
free transactions, The Wall Street Journal reported Monday, citing anonymous
sources. Edward D. Breen, the conglomerate's current chief executive, would
run a slimmed-down version of Tyco - consisting of its security, fire-
protection, pump and valve operations, the report said. It can take many
months to get legal and financial details ironed out, the report added.
The stock hiked up 2.7% to $30.80 in pre-open trading.
Also, Duke Energy agreed to sell part of its North American power
generation operation to investment firm LS Power for $1.5 billion.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
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SOURCE Thomson Financial Corporate Group
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