Wall Street Seen Edging Down
02/03/2005
LONDON (Reuters) - U.S. shares were seen opening modestly weaker on Thursday with online retailer Amazon.com Inc. (AMZN) expected to fall after its results missed forecasts and as investors await the latest batch of results and economic data.
Shares in Amazon tumbled 14 percent in after-hours trade on Wednesday after posting fourth-quarter core earnings that fell short of analysts’ expectations.
Earnings reports from companies including International Paper (IP), PepsiCo (PEP) and Gillette (G) will be in the spotlight, with Gillette posting its last annual results as an independent ahead of a buyout from Procter & Gamble (PG).
The increase seen in merger and acquisition activity and private equity buyouts was likely to continue and be a major theme, said Daniel Birch, a strategist at broker Execution in London.
“There’s a lot of cash around at the moment and people are wondering how to spend this excess cash,” he said.
“It’s typical of this stage of an economic cycle that you get venture capitalists and companies coming in and buying at these prices.”
The Wall Street Journal on Thursday reported MCI Inc. (MCIP) and Qwest Communications International Inc. (Q) are in talks that could lead to a merger, with Qwest offering about $6.3 billion to buy MCI.
DOW CHARTS SUPPORTIVE
U.S. stock futures were pointing to mildly softer starts for the three main indexes.
Richard Lake, a technical analyst at Brewin Dolphin Securities, said charts suggested the recent move lower in the Dow Jones industrial average (DJI) had run its course.
“The DJI has started to improve and now looks poised to resume its main uptrend. I would suggest that a closing level of 10,700 would confirm this idea.”
On the macro-economic front, the Institute of Supply Management’s non-manufacturing survey for January is due at 10:00 a.m. EST, along with data on durable goods orders.
Weekly jobless claims, fourth quarter productivity numbers and labor costs data will also be eyed ahead of Friday’s key non-farm payrolls numbers.
DIGENE, STARBUCKS SEEN DOWN
Among stocks on the move, shares of Digene Corp. (DIGE), which makes a test to help detect cervical cancer, are expected to dive after it reported a slightly lower profit for the second fiscal quarter. Digene stock fell nearly 21 percent to $21 after hours.
Shares of coffee retailer Starbucks Corp. (SBUX) fell over 5 percent to $51.25 via Inet after it reported a lower-than-expected rise in January same-store sales.
Shares in Cyberonics Inc. (CYBX) are expected to jump after the company said U.S. regulators have given conditional approval to bid to sell an implanted device to treat chronic depression.
Its shares rose 27 percent in after hours trade.