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Flat open in U.S. as earnings season begins

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The major market averages are looking at a mixed to lower open as overnight and morning earnings news gives investors a mixed view of this quarters earnings outlook.

Shares of drugmaker Forest Labs (NYSE:FRX) $100.00 are extending overnight gains at $105.99 after the company said that its fiscal 2003 third-quarter profit will top analyst's expectations by "at least 15%" thanks to strong sales of its antidepressants Celexa and Lexapro. The New York-based company had guided analyst's higher late last year and current consensus of analysts polled by First Call were for the company to earn $0.77 per share.

Dow component Home Depot (NYSE:HD) $24.88 are being marked down $2.18 at $22.70 (-8.7%) after the home improvement retailer warned that its full-year profit would come in between $1.53- $1.55 per share, which is below analyst's estimates for the company to earn $1.57. Home Depot cited slow sales during December, which it said could mean a same-store sales decline of up to 10% as opposed to previous projections for a 3-5% decline.

Retailer Walgreen (NYSE:WAG) $30.10 reported first-quarter EPS of $0.21 a share (excluding items), which was 1-cent above consensus on revenues of $7.48 billion, marking a 14.1% year-over-year top- line growth. Analyst's had expected revenues at $7.47 billion. In this morning's pre-market trade, shares of Walgreen added $0.90 to $31.00.

Guidant (NYSE:GDT) $31.60 confirmed late Thursday it's canceling plans to acquire Cook Group for $3 billion, after results from a clinical trial failed to show that Bloomington, Ind.-based Cook's drug-coated stent is more effective than Guidant's own device. Indianapolis-based medical-device maker Guidant said the trial results did not meet the conditions of the merger, in which it planned to buy closely held Cook for $3 billion in stock in an effort to advance drug-coated stents, which are devices used for keeping arteries unclogged. The break-up includes a fee of $50 million paid by Guidant to privately held Cook and an amendment to an existing stent delivery system agreement, the companies said. Guidant's shares ticked lower at $29.80 on light trading in this morning's pre-market trade.

S&P futures (sp03h) are currently down 0.10 points at 907.30, while NASDAQ futures (nd03h) are edging up 2 points at 1,027. Dow futures (dj03h) are off 16 points at 8,575, in large part due to Home Depot's warning.

Fair value for the S&P 500 today is $0.18. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.29 and set for program selling at $-2.14. Fair value for the NASDAQ-100 today is $2.87.

After a strong round of selling yesterday, Treasuries are seeing some slight carry-over of selling this morning with the 10-year March futures contract (ty03h) 113'08 -0.13% trading down 5/32, which sees the benchmark bond's YIELD ($TNX.X) edging up to yield 4.068%.

Lower U.S. stockpiles and a continued strike by oil workers in Venezuela have the March Light, Sweet Crude Oil futures contract (cl03h) gaining 0.96% at $31.40, or $0.30/barrel.

Jeff Bailey

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