Stocks are set for a slow start Thursday after Motorola (MOT) lowered earnings guidance and crude oil prices made a run above $60 a barrel. One hour before the opening bell on Wall Street, stock index futures indicated that the Dow Jones Industrial Average ($INDU) might add 20 points in early trading. The NASDAQ ($COMPQ) is expected to open little changed.
Tech stocks might see a bit of morning selling after Motorola warned that sales and profits would come in below expectations because of plunging mobile phone prices. Motorola also announced some management changes and an increase in its share buyback program. Investors expressed disappointment in the overall news, sending shares down $1.00 to $17.74 in overseas trading.
Meanwhile, Procter & Gamble (PG) might help the Dow in early trading after Bear Stearns raised the rating on the stock to "outperform." Barnes and Noble (BKS) is out with fourth quarter earnings of $1.84 a share, which was four cents below analyst estimates. Borders (BGP) posted $1.61 a share, which missed by a penny. However, the homebuilders might bounce after KB Homes (KBH) posted earnings of 34 cents a share on $1.767 in revenues, which topped expectations of 32 cents on $1.684 million. Nike (NKE) and Palm (PALM) will be active today ahead of earnings reports due out after the closing bell.
Energy related stocks might see gains early Thursday after crude oil prices rose $1.00 to $60.61 a barrel. Energy prices have been heading higher since yesterday's Energy Information Association [EIA] weekly data showed crude oil stockpiles rising, but a big decline in gasoline stockpiles; which is fueling some worries about supply heading into the busy summer driving season.
In economic news, the latest weekly jobless claims unexpectedly declined in the week ended March 17. According to the Labor Department, the number of filings for jobless benefits fell by 2,000, from 318,000 to 316,000. Economists were looking for a rise to 320,000. The list of leading economic indicators is due out at 10:00 a.m. Eastern time. Economists expect the report to show a decline of -.3% in February, compared to a .1% increase in the previous month.
Profit taking might also affect early action. Yesterday, the Dow rallied 159 points and the NASDAQ gained nearly 50 after the Federal Reserve Open Market Committee [FOMC] post-meeting statement held no unpleasant surprises, which inspired an afternoon rally on Wall Street. Today, index futures indicate that the major averages might hold on to most of those gains. That is, while the Motorola warning might motivate some profit taking in some of the tech names, that weakness might be offset by gains in other sectors such as the homebuilders and energy.
Optionetics.com ~ Your Options Education Site