teknobucks
01-09-2005, 09:41 AM
More losses ahead after rough week
No lifting of tone seen for year's second week of trading
By Christopher Noble, CBS Jan. 8, 2005
SAN FRANCISCO (CBS) - U.S. stocks are likely to lose more ground next week, adding to declines suffered in the year's first week of trading, as investors await new indications on the state of the economy and corporate earnings, strategists said.
As 2005 enters its second week, investors are likely to hold back from new buying as they assess prospects for further interest rate rises, slowing earnings growth and fluctuations in the price of oil, they said.
And with only a modest flow of data due and the full rush of fourth-quarter earnings still a week away, investor hesitancy was unlikely to ease.
"What you're seeing play out right now is early term defensiveness by investors, awaiting information on the economy and interest rates and earnings," said Joe Battipaglia, chief investment officer at Ryan Beck & Co.
Strategists said investors were waking up to the realization they faced more interest rate increases, further blunt talk about rates from the Federal Reserve and slowing corporate earnings growth. There is also concern that consumer spending is likely to slow this year.
"One of the things we are foreseeing is that earnings growth may not be as strong as in past years and the consumer may not be as strong as he has been," said Paul Nolte, director of investments at Hinsdale Associates. "He's been spending like there is no tomorrow and now it's tomorrow."
Investors might also be seeking to avoid a repeat of 2004, when markets bounded higher in January and February and then stagnated for much of the year.
"For these reasons the market is taking quick stock of itself and putting in a more muted performance," said Battipaglia.
Stocks fell for most of the week, with the Dow Jones Industrial Average losing 18.92 points on Friday to close at 10,603.96. It was a loss of 1.7 percent for the week.
The Nasdaq composite closed at 2,088.61 on Friday, a loss of 1.39 on the day and 4 percent for the week.
The Standard & Poor's 500 Index fell 1.70 points on Friday, closing at 1,186.19, a loss of 2.1 percent for the week.
Earnings begin to roll out
Though the brunt of earning is still a week away, fourth quarter results from Alcoa Inc. (AA: news, chart, profile) will kick off the season on Monday and be followed by earnings from Intel Corp. (INTC: news, chart, profile), Apple Computer (AAPL: news, chart, profile) and Sun Microsystems (SUNW: news, chart, profile).
Data from Thomson First Call shows that the expected fourth-quarter earnings growth rate for the S&P 500 stands at 15.3 percent, up from 15.1 percent seen last week but below the 15.5 percent estimate at the start of the quarter.
While still healthy, this growth rate is weaker than the 16.8 percent seen in the third quarter of this year and much lower than the 28.3 percent expansion seen in the fourth quarter of 2003.
On the preannouncement front, the negative to positive ratio among S&P 500 companies was at 1.9, below the 2.1 ratio at the same point in the third quarter and the long term average of 2.0, Thomson First Call said.
Alcoa is expected to earn 41 cents per share on sales $6.10 billion in the final quarter of 2004, according to analysts polled by Thomson First Call.
Biotech concern Genentech Inc. (DNA: news, chart, profile), also reporting on Monday, is expected to earn 22 cents per share on revenue of $1.30 billion.
Chip giant Intel will report fourth-quarter results Tuesday, with analysts forecasting a profit of 31 cents per share on sales of $9.41 billion. See earnings preview for Intel.
Tuesday will also bring results from M&T Bank Corp. (MTB: news, chart, profile), which is expected to report a profit of $1.59 per share on sales of $687 million. Supervalu Inc. (SVU: news, chart, profile) is expected to post a profit of 58 cents per share on sales of $4.72 billion when it reports on Tuesday.
On Wednesday, Apple will report fiscal first-quarter results and is expected to post a profit of 48 cents per share on revenue of $3.15 billion, with gains driven by strong sales of its iPod portable music player.
Thursday will see results from Sun Microsystems, which is expected to report a fiscal second-quarter profit of 1 cent per share on revenue of $2.93 billion.
Marshall & Ilsley (MI: news, chart, profile) is expected to report a fourth-quarter profit of 70 cents per share on sales of $683 million. MGIC Investment (MTG: news, chart, profile) is expected to post a profit of $1.34 per share on sales of $394 million.
On Friday, BB&T Corp. (BBT: news, chart, profile) is expected to post a fourth-quarter profit of 76 cents per share on sales of $1.42 billion.
Moderate dose of data
Data on November wholesale inventories, due on Monday, is expected to show inventories rose by 0.8 percent after a 1.1 percent rise in October, according to analysts polled by CBS MarketWatch.
November trade deficit data, released on Wednesday, is expected to show the gap shrank to $53.4 billion from October's $55.5 billion.
On Thursday, investors will have to digest the December import price index, which is expected to have fallen 0.4 percent after November's 0.2 percent rise. Thursday will also bring retail sales for December, which are expected to have risen 0.6 percent after November's 0.1 percent gain. Sales excluding cars are seen up 0.4 percent after a 0.5 percent rise in November.
On Friday, December's producer price index is expected to show a 0.1 percent rise after November's 0.2 percent gain. So-called core PPI, which excludes volatile food and energy costs, is expected to rise 0.2 percent after November's 0.5 percent gain.
November inventories data, also due on Friday, is expected to show a gain of 0.4 percent after October's 0.2 percent rise.
December Industrial production is expected to have risen 0.4 percent after a November gain of 0.3 percent. Capacity use is forecast to rise to 78.3 percent from 77.6 percent in November.
No lifting of tone seen for year's second week of trading
By Christopher Noble, CBS Jan. 8, 2005
SAN FRANCISCO (CBS) - U.S. stocks are likely to lose more ground next week, adding to declines suffered in the year's first week of trading, as investors await new indications on the state of the economy and corporate earnings, strategists said.
As 2005 enters its second week, investors are likely to hold back from new buying as they assess prospects for further interest rate rises, slowing earnings growth and fluctuations in the price of oil, they said.
And with only a modest flow of data due and the full rush of fourth-quarter earnings still a week away, investor hesitancy was unlikely to ease.
"What you're seeing play out right now is early term defensiveness by investors, awaiting information on the economy and interest rates and earnings," said Joe Battipaglia, chief investment officer at Ryan Beck & Co.
Strategists said investors were waking up to the realization they faced more interest rate increases, further blunt talk about rates from the Federal Reserve and slowing corporate earnings growth. There is also concern that consumer spending is likely to slow this year.
"One of the things we are foreseeing is that earnings growth may not be as strong as in past years and the consumer may not be as strong as he has been," said Paul Nolte, director of investments at Hinsdale Associates. "He's been spending like there is no tomorrow and now it's tomorrow."
Investors might also be seeking to avoid a repeat of 2004, when markets bounded higher in January and February and then stagnated for much of the year.
"For these reasons the market is taking quick stock of itself and putting in a more muted performance," said Battipaglia.
Stocks fell for most of the week, with the Dow Jones Industrial Average losing 18.92 points on Friday to close at 10,603.96. It was a loss of 1.7 percent for the week.
The Nasdaq composite closed at 2,088.61 on Friday, a loss of 1.39 on the day and 4 percent for the week.
The Standard & Poor's 500 Index fell 1.70 points on Friday, closing at 1,186.19, a loss of 2.1 percent for the week.
Earnings begin to roll out
Though the brunt of earning is still a week away, fourth quarter results from Alcoa Inc. (AA: news, chart, profile) will kick off the season on Monday and be followed by earnings from Intel Corp. (INTC: news, chart, profile), Apple Computer (AAPL: news, chart, profile) and Sun Microsystems (SUNW: news, chart, profile).
Data from Thomson First Call shows that the expected fourth-quarter earnings growth rate for the S&P 500 stands at 15.3 percent, up from 15.1 percent seen last week but below the 15.5 percent estimate at the start of the quarter.
While still healthy, this growth rate is weaker than the 16.8 percent seen in the third quarter of this year and much lower than the 28.3 percent expansion seen in the fourth quarter of 2003.
On the preannouncement front, the negative to positive ratio among S&P 500 companies was at 1.9, below the 2.1 ratio at the same point in the third quarter and the long term average of 2.0, Thomson First Call said.
Alcoa is expected to earn 41 cents per share on sales $6.10 billion in the final quarter of 2004, according to analysts polled by Thomson First Call.
Biotech concern Genentech Inc. (DNA: news, chart, profile), also reporting on Monday, is expected to earn 22 cents per share on revenue of $1.30 billion.
Chip giant Intel will report fourth-quarter results Tuesday, with analysts forecasting a profit of 31 cents per share on sales of $9.41 billion. See earnings preview for Intel.
Tuesday will also bring results from M&T Bank Corp. (MTB: news, chart, profile), which is expected to report a profit of $1.59 per share on sales of $687 million. Supervalu Inc. (SVU: news, chart, profile) is expected to post a profit of 58 cents per share on sales of $4.72 billion when it reports on Tuesday.
On Wednesday, Apple will report fiscal first-quarter results and is expected to post a profit of 48 cents per share on revenue of $3.15 billion, with gains driven by strong sales of its iPod portable music player.
Thursday will see results from Sun Microsystems, which is expected to report a fiscal second-quarter profit of 1 cent per share on revenue of $2.93 billion.
Marshall & Ilsley (MI: news, chart, profile) is expected to report a fourth-quarter profit of 70 cents per share on sales of $683 million. MGIC Investment (MTG: news, chart, profile) is expected to post a profit of $1.34 per share on sales of $394 million.
On Friday, BB&T Corp. (BBT: news, chart, profile) is expected to post a fourth-quarter profit of 76 cents per share on sales of $1.42 billion.
Moderate dose of data
Data on November wholesale inventories, due on Monday, is expected to show inventories rose by 0.8 percent after a 1.1 percent rise in October, according to analysts polled by CBS MarketWatch.
November trade deficit data, released on Wednesday, is expected to show the gap shrank to $53.4 billion from October's $55.5 billion.
On Thursday, investors will have to digest the December import price index, which is expected to have fallen 0.4 percent after November's 0.2 percent rise. Thursday will also bring retail sales for December, which are expected to have risen 0.6 percent after November's 0.1 percent gain. Sales excluding cars are seen up 0.4 percent after a 0.5 percent rise in November.
On Friday, December's producer price index is expected to show a 0.1 percent rise after November's 0.2 percent gain. So-called core PPI, which excludes volatile food and energy costs, is expected to rise 0.2 percent after November's 0.5 percent gain.
November inventories data, also due on Friday, is expected to show a gain of 0.4 percent after October's 0.2 percent rise.
December Industrial production is expected to have risen 0.4 percent after a November gain of 0.3 percent. Capacity use is forecast to rise to 78.3 percent from 77.6 percent in November.