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

Financials roil markets

Financials roil markets

RTGAM



Financial stocks sent North American markets on a volatile ride Wednesday as a warning from Canadian Imperial Bank of Commerce kept Toronto investors reeling while Wall Street faced mixed news from Morgan Stanley.
Toronto's S&P/TSX composite index ended up 31.75 points at 13,389.82 as the financial sector dropped by 0.2 per cent.

Overall, the sector had been up 1 per cent before CIBC announced a "reasonably high probability" that it will incur a "large charge" related to troubles at ACA Financial Guaranty Corp., a hedge counterparty to $3.5-billion (U.S.) in U.S. subprime real estate.
CIBC's stock fell precipitously after the announcement and closed down $1.15 (Canadian) or 1.6 per cent to $71.14 on the TSX.

Morgan Stanley, meanwhile, was forced to take a much larger than expected writedown of $9.4-billion (U.S.) related to the credit crisis, but coupled that with the positive news that it got a $5-billion investment from China's government-controlled investment vehicle, China Investment Corp.

On Wall Street, the Dow Jones industrial average couldn't overcome an afternoon struggle for gains, closing down 25.2 points to 13,207.3. The Nasdaq composite index also backed out of the valley with a five-point gain to 2,601.01 while the S&P 500 index moved down two points to 1,453.

On the TSX, energy stocks gained 0.7 per cent on a report that U.S. crude oil inventories fell by 7.59 million barrels last week.

The light sweet crude oil contract for February closed up $1.16 cents to $91.24 a barrel on the New York Mercantile Exchange. Canadian Press

Copyright 2001 The Globe and Mail