Wall Street Seen Opening Flat to Higher
09:17 a.m. 01/16/2003
By Haitham Haddadin
NEW YORK (Reuters) - Stocks were expected to open flat to a notch higher on Thursday as reports on jobs and inflation improved the tone of a market weighed by renewed jitters over a possible war with Iraq and higher oil prices.
New U.S. claims for unemployment benefits unexpectedly fell to their lowest level since November in the week ended Jan. 11, the Labor Department said on Thursday.
Another economic report, the Consumer Price Index, showed that consumer prices rose slightly in December but ended the year on a tame note, underscoring the lack of inflationary pressures in the U.S. economy.
"What really got the market moving today was the surprise drop in jobless claims. Most analysts expected jobless claims to rise but they fell fairly substantially, which is very good news," said Phil Flynn, vice president and senior market analyst at Alaron Trading Corp.
"With unemployment hovering around 6 percent, this drop in jobless claims could be a good sign for the future, though the market will still have to see some building in new jobs in the future."
Equity index futures improved after the release of the data, and were signaling a flat to a slightly higher open on Wall Street. The Nasdaq 100 March contract was unchanged at 1,077 earlier but later rose 2 points to 1,079, and Standard & Poor's 500(SPX)futures added 1.40 points at 922.40, having earlier slumped by a similar amount. Dow futures shed a loss of 6 points and moved up 19 points to 8,750.
The Street is also on the lookout for more earnings news from a number of marquee technology names including Microsoft Corp.(MSFT)and International Business Machines Corp.(IBM), both due after the regular session.
Stocks fell Wednesday after a lackluster capital spending forecast from technology bellwether Intel Corp.(INTC)disappointed investors looking for signs that corporate America's profit picture is improving.
HIGH OIL PRICES WEIGH
In international news which could impact trading on Thursday, chief U.N. weapons inspector Hans Blix said he would tell Iraq the situation was "very tense and very dangerous" and only fuller cooperation with his team could avert the option of war. The news sent oil prices higher on international markets.
"The Iraqi situation has not died down and oil is up another 50 cents because of the comments by Hans Blix," said Peter Boockvar, equity strategist at Miller Tabak & Co. "The stock market will have a difficult time to move higher with oil at these levels."
Oil prices in New York now hover above $33 a barrel amid fears over a possible U.S. war with oil-rich Iraq and worries about low supplies due to the prolonged Venezuelan strike.
On Wednesday, stocks slumped. Weakness in a key wholesale-level inflation gauge, the Producer Price Index (PPI), spurred concerns that a lack of pricing power could hinder any rebound in corporate profits, and the Federal Reserve's closely watched Beige Book report suggested the U.S. economy's sluggishness continued into early January.
In Thursday's Consumer Price Index report, the most widely watched gauge of U.S. inflation pressures gained a seasonally adjusted 0.1 percent in December. It also posted a 0.1 percent increase outside of the volatile food and energy categories. The gains were less than Wall Street analysts had expected.
"I think the CPI (numbers) were neutral to friendly for the market. The good news is that inflation for the consumer continues to be very low, which will keep the consumers spending," said Flynn of Alaron Trading.
"Of course there is a problem on the horizon even though we got good news today on consumer inflation. The threat of higher oil prices is overshadowing the report."
Unemployment claims dipped by 32,000 to a seasonally adjusted 360,000 in the week, down from a revised 392,000 in the prior week. The level was much lower than economists expected but a Labor analyst warned that adjustments intended to deal with seasonal fluctuations in claims may have had a downward impact on the numbers.
APPLE, YAHOO REPORT
Several technology stocks sagged in after-hours trading on Wednesday as investors sifted through a mixed bag of earnings reports from marquee names like Yahoo Inc.(YHOO)and Apple Computer Corp.(AAPL)
Apple Computer posted its second consecutive net loss after soft year-end computer sales and a restructuring charge. Shares fell to $14.29 from $14.43 at Wednesday's close.
Internet media company Yahoo posted better-than-expected earnings after Wednesday's close, reversing a loss from a year ago. But Yahoo's shares fell in extended-hours trading, slipping to $18.91 from $19.58 at Wednesday's close. So far this year, Yahoo's shares have risen nearly 20 percent.
United Technologies Corp.(UTX)rose to $65.50 from a close of $64.40. It said on Thursday quarterly net income rose 54 percent on robust sales of its Otis elevators in Asia and from easier comparisons in the year-earlier period when it took restructuring charges.
On Wednesday, the tech-laden Nasdaq Composite(COMP)dropped 22.19 points, or 1.52 percent, to 1,438.80. The blue-chip Dow Jones industrial averagefell 119.44 points, or 1.35 percent, to 8,723.18. The Standard & Poor's 500 index(SPX)shed 13.44 points, or 1.44 percent, to 918.22.
