Markets to weigh tech vs financials

Markets to weigh tech vs financials

RTGAM



Markets are quietly optimistic that a slew of economic reports on Thursday will shed a warm glow on the status of the U.S. expansion, with a quarterly report from Wall Street's Bear Stearns lurking.

On tap is the U.S. Commerce Department's final reading on third-quarter gross domestic product before the opening bell and the Conference Board's index of leading economic indicators after trading begins.

European stocks are rising for the first time in four days, led by automotive, oil and technology companies, with platinum specialist Johnson Matthey said to be in play on a possible bid coming from Dow Chemical.

Analysts say Bear Stearns is expected to report its first ever quarterly loss before the market open, one day after Morgan Stanley took an additional $5.7-billion (U.S.) writedown, bringing its losses on mortgage-related securities to $9.4-billion.

"Bear Stearns is going to be a very big catalyst. They're really one of the ones that started this whole mess with the collapse of their hedge funds over the summer," Tim Smalls, head of U.S. stock trading at Execution LLC, told Reuters. "Once the world knows what these numbers are, then they can at least make an educated decision whether to own the stock or not own the stock."

At 7:30 a.m. EST, Dow Jones industrial futures are up 11 points, S&P 500 futures up 3.3 points and Nasdaq 100 futures up 7.75 points.

So while investors are still nervous about the financial sector, they're encouraged about technology after results from database software maker Oracle topped analysts' estimates and Citigroup raised its price estimate on the stock by 12 per cent to $28.

Nike is also likely to ring up a few endorsements after Lehman Brothers raised its price target on the stock by 8.6 per cent to $76 after second-quarter profit climbed on higher sales in China and Europe and a weaker U.S. dollar.

Copyright 2001 The Globe and Mail