Wall Street Seen Opening Mostly Flat
September 23, 2004 06:33:00 AM ET
LONDON (Reuters) - U.S. stocks were expected to open steady on Thursday with investors licking their wounds after a sharp fall the previous session and taking heart from a retreat in crude prices after a sharp spike higher.
Oil major Exxon Mobil (XOM) will be eyed after Deutsche Bank cut its rating on the stock to ``hold'' from ``buy'' and reduced its recommendation on the global oil sector to ``neutral'' from ``overweight.''
By 6:14 a.m. EDT, U.S. stock futures (SPZ4) DJZ4) (NDZ4) were pointing to a flat to slightly weaker start for the three main indexes.
U.S. stocks tumbled on Wednesday after oil prices jumped more than a dollar to more than $48 a barrel and investment bank Morgan Stanley (MWD) reported a fall in its quarterly profit.
``We are getting quite a few profit warnings and I think there's going to be a whole lot more of them,'' said Steve Previs, a trader at Jeffries International in London.
In New York the blue-chip Dow Jones industrial average closed 1.33 percent lower at 10,109.2 points, its lowest close in more than three weeks. The tech-heavy Nasdaq Composite Index fell 1.85 percent to 1,885.7 points.
``Some investors have decided to slam on the brakes it would seem, and none of today's U.S. data are of sufficient importance to drown out the sour notes emanating from the oil market,'' said Anais Faraj, a strategist of Nomura.
U.S. light crude prices spiked to a high of $48.65 a barrel on Wednesday after data showed a steep fall in U.S. inventories after a series of storms disrupted production and deliveries.
But prices retreated below $48 a barrel on Thursday as the U.S. government considered whether to lend some crude to refiners from its strategic petroleum reserve.
DATA EYED
Data due includes weekly jobless claims, the Chicago Fed's National Activity Index and August lead indicators.
``The lead indicators have been declining over the last two months and some people say that if they decline three times in a row, then we are in recession,'' said Tom Hougaard, chief market strategist at spread betting firm City Index.
``Whether we are or not, I think Wall Street is beginning to worry about that,'' he said, adding that it appeared the Federal Reserve was still committed to raising interest rates.
On the corporate front, Lehman Brothers Holdings Inc. (LEH) will be watched after the Wall Street Journal the banking heavyweight is close to settling a class action lawsuit for $220 million stemming from allegations that it colluded with other brokerages to mislead Enron Corp. shareholders.
The Journal also reported that American Pharmaceutical Partners (APPX) is facing a probe by regulators over whether it may have misled investors about the progress of a key cancer drug it is developing.
© 2004 Reuters
