Stocks Seen Lower, Weighed Down by Oil
September 27, 2004 07:59:00 AM ET
By Michael Flaherty
NEW YORK (Reuters) - U.S. stocks looked set to open lower on Monday amid investor concern that high energy costs will squeeze corporate profits and consumer spending.
In corporate news, electricity provider Westar Energy Inc. (WR) cut its 2004 earnings forecast because of cooler-than-normal summer weather and other factors. Casino operator and slot machine maker Alliance Gaming Corp. (AGI) said it would take a charge of 9 cents per share against earnings for a patent infringement judgment against a former unit of the company.
Oil prices pushed above $49 a barrel as worries about the stability of supplies from Iraq, Nigeria and Russia compounded concern over low fuel stocks ahead of the winter.
U.S. light crude rose 37 cents to $49.25 in electronic trading.
``One of the concerns clearly is oil prices,'' said Mike Lenhoff, chief strategist and head of research for Brewin Dolphin Securities Ltd. ``At these levels, the prices are not debilitating, but clearly they're going to be if they climb higher. Earnings downgrades and loss of earnings will accelerate the more these prices shoot for the sky. It's very disconcerting.''
S&P 500 futures were 3.9 points lower, below fair value accounting for dividends, interest rates and time to expiration on the contract, indicating a lower market open.
Dow Jones industrial index futures dropped 31 points, while Nasdaq 100 futures declined 5 points.
High oil prices weighed on European stocks by midsession on Monday with the FTSE Eurotop 300 index of pan-European blue chips down 0.6 percent. The narrower DJ Euro Stoxx 50 index (.STOXX50E) fell 0.7 percent to 2,720.5 points.
Last week, the Dow fell 2.3 percent, the S&P 500 lost 1.6 percent, while the Nasdaq dropped 1.6 percent. It was the second straight losing week for the Dow, which is languishing around five-week lows. The Nasdaq's drop snapped a string of five weekly gains.
Stocks to watch include Lockheed Martin Corp. (LMT), which was chosen by the Pentagon to lead a $6.4 billion Navy satellite project aimed at boosting U.S. forces' communications capabilities tenfold.
Shares of embattled mortgage finance giant Fannie Mae (FNM) will be eyed as the company was close to a deal with regulators late on Sunday that would force it to keep billions of dollars more in cash on hand while it corrects accounting problems, a source familiar with the negotiations said.
On the economic data front, new home sales figures for August are due at 10 a.m. (1400 GMT). Economists expect a total of 1.17 million units, up slightly from the previous month.
© 2004 Reuters
