By Leslie Wines, MarketWatch
Jan 11, 2006
U.S. stocks edged lower Wednesday amid some concern the fourth-quarter
earnings season may not live up to expectations after DuPont became the second
component of the Dow Jones Industrial Average, after Alcoa Inc., to disappoint
investors.
The Dow Jones Industrial Average was off 4 points at 11,006.
The Nasdaq Composite Index dipped 1.9 points to 2,318 while the S&P 500
Index put in a fractional loss, down 0.28 point at 1,289.41.
"The DuPont profit warning shakes people up about the upcoming earnings
season, especially on the heels of Alcoa and Phelps Dodge poor reports," said
John Forelli, senior vice-president and portfolio manager at
Independence Investments. "But we have to remember that we're going to see the
bad reports come out early so I think it's too early for investors to give up
on the earnings season."
On the broader market for equities, decliners outpaced advancers by 15 to
12 on the New York Stock Exchange, and by 7 to 5 on the Nasdaq.
By sector, Internet stocks, oil services stocks, airlines and energy
companies all trended lower.
Brokers and computer hardware stocks are two of the sectors showing the
most significant gains.
Crude futures backed off their recent peaks as the energy pits brace
themselves for the latest weekly inventory data. Traders are expecting figures
to show increases in gas and distillates, but a drop in crude supplies. The
benchmark February contract dipped 2 cents to $63.35.
Gold for February delivery was trending lower, last down $1.20 at $544.50
an ounce. On Monday gold futures struck a 25-year high and many analysts
believe weaker prices seen Tuesday and early Wednesday are only temporary.
Treasuries edged higher ahead of a speech on monetary policy by New York
Federal Reserve President Timothy Geithner. The benchmark 10-year Treasury
note was last up 4/32 at 100 20/32, yielding 4.41%.
On the currency markets, the British pound traded sharply lower against
the U.S. dollar on news that the UK's trade deficit for goods swelled to a
record 6 billion pounds in November.
The pound was last quoted at $1.750, down from $1.76 before the news.
Elsewhere, the euro tacked on 0.4% against the dollar at $1.2111 while the
greenback dipped 0.2% to 114.13 yen. The dollar overall in the year to date
has been under pressure due to strong signals that the Federal
Reserve is on the verge of wrapping up its current series of rate increases.
Dow stocks in focus
Shares of DuPont fell 3% to $41.25 in morning trading. The chemicals
manufacturer warned that its fourth-quarter will not meet analysts'
expectations due to hurricane-linked disruptions.
Hewlett-Packard, also in the Dow, was 22 cents higher at $31 in early
trading. The company got an upgrade from Prudential Equity, which noted
positive cost savings.
Johnson & Johnson was in focus after the New York Times said the drug
giant is considering a new bid for medical devices maker Guidant Corp.
The paper said Guidant's board has already met and declared Boston
Scientific Corp.'s $25 billion offer superior to Johnson & Johnson's original
$21.4 billion bid, a move which would have triggered a five-day deadline for
the pharmaceutical company to make a new offer. Johnson & Johnson shares fell
53 cents to $62.57. Boston Scientific's stock was off 24 cents at $26.24 while
shares of Guidant rose 36 cents to $69.75.
Other stock standouts
Shares in Apple Computer Inc. climbed 2.9% to $83.17 in morning trading
after brokers UBS and Bank of America raised their price target on the maker
of the iPod digital music player. The move comes after shares in the company
rallied Tuesday when Chief Executive Steve Jobs announced December quarter
revenue had outpaced estimates.
Yahoo Inc. was 1.9% lower at $42.18 after Merrill Lynch downgraded the
stock to neutral from buy, noting limited prospects for its internal portal.
Genentech dropped 5.7% to $88 in early trading after its latest earnings
report showed unexpectedly light sales of its Avastin drug.
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
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SOURCE Thomson Financial Corporate Group
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