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MORNING WATCH, Mar. 24
By Frederic Ruffy, Optionetics.com
3/24/2005 6:00 AM EST

http://optionetics.com/articles/article_full.asp?idNo=12131

Stocks are set to open higher Thursday after General Electric (GE) raised its first quarter earnings forecast. Approximately one hour before the opening bell on Wall Street, stock index futures hinted at a possible 35-point move higher in the Dow Jones Industrial Average ($INDU) and a five or ten-point gain for the Nasdaq ($COMPQ). However, trading might be cautious ahead of the three-day weekend. Rising oil and gas prices as well as surprisingly weak economic data might also influence early trading.

Durable goods rose much less than expected during the month of February. According to data released from the Commerce Department early Thursday, orders for factory hard goods rose just .3% last month. Excluding transportation, durable goods rose.2%. Economists were looking for a rise of 1% in durable goods and a gain of .5% excluding transportation.

Meanwhile, the latest weekly jobless claims figures came in above expectations. According to the Labor Department, the number of new filings for jobless benefits in the week ended March 19 rose to 324,000 from a revised 321,000. Economists were looking for a decline to 315,000.

Despite the weaker than expected economic numbers, stock index futures held steady and even rose a bit after the reports. The data indicates that the economy is perhaps not as strong as some might have thought, which helps to ease some of the inflation and interest rate jitters that rattled the market earlier this week.

One more piece of economic data is due out before the three-day weekend. At 10:00 a.m. ET, a report is expected to show new home sales rising to 1.185 million units from 1.106 the month before. Markets are closed tomorrow for Good Friday.

Oil and gasoline prices will be in focus. Prices are moving higher after an explosion at a refinery in Texas disrupted operations. The refinery is the source of 3% of US fuel and the disruption raises supply concerns, just as the US moves into the busy summer driving season. Crude rose 57 cents to $54.38 and gasoline hit all time highs.

Positive earnings news from General Electric is seen offsetting some of the oil worries, however. The world’s largest company by market value said it expects to earn 37 to 38 cents a share, compared to previous estimates of 36 to 37 cents. The stock rose 40 cents to $35.90 in overseas trading.

In other stock new Thursday, shares of major internet companies might climb higher after Yahoo (YHOO) announced a $3 billion stock repurchase plan, which might be a sign that some dot coms think their share prices are undervalued. Lexar Media (LEXR) shares were trading up $2.33 to $5.50 on news a California court ordered Toshiba to pay the company $318 million related to a dispute over technology.

Lexar is scheduled to post profits after the close of trading. Analysts expect the company to post a loss of more than 70 cents for the quarter. Tibco Software (TIBX), Verity (VRTY), and Solectron (SLR) also report profits after the closing bell. After that, there are no earnings or economic reports scheduled until after the three-day weekend.



Frederic Ruffy
Senior Writer
Optionetics.com ~ Your Options Education Site