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Lower open ahead as war effort continues

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Stocks are set to open lower as coalition warplanes returned to the sky as one of the worst sandstorms in Iraq has subsided. The clearing weather had coalition preparing to step up attacks, including a second front opening in northern Iraq with 1,000 U.S. paratroopers jumped into the Kurdish-controlled area.

The news of a stepped up or resuming war effort had S&P futures (sp03m) falling quickly to the 862 level early this morning and falling further to a low of 859.60, but economic data released this morning from the Labor Department on weekly jobless claims has provided partial lift to the stock futures markets, but not enough to offset overnight weakness.

The Labor Department said initial jobless claims for the week ended March 22, fell by 25,000 to 402,000, which was below economist's forecast of 420,000. The closely watched four-week moving average, which smoothes out the week-to-week fluctuations fell by 4,000 to 422,500 and was the first decline in the four- week average since the last week in January. Still, economists view a four-week average above 400,000 as sign of a weak labor market.

The number of Americans who continue to collect jobless benefits fell 7,000 to 3.52 million.

But after a few weeks of significant increases, the four-week average remains elevated. It jumped by 45,000 to 3.50 million in the latest report, the highest in about four months.

The insured unemployment rate held at 2.8 percent.

Other economic data released had the final Q4 gross domestic product (GDP) showing the economy grew at a 1.4% annual rate, which was inline with economists forecast of 1.4%. Final sales of domestic product rose 1.1% in the quarter, reflecting weak output. Domestic purchases increased 2.9%, reflecting relatively stronger demand.

The economy grew 2.4% in 2002 after growing 0.3% in 2001. The nominal value of the goods and services produced in the United States rose to $10.45 trillion in 2002.

S&P futures (sp03m) currently trade down 7.2 points at 860.80, NASDAQ futures (nd03m) are lower by 10.50 points at 1,059.60, while Dow futures (dj03m) are down 58 points at 8,140.

Fair value for the S&P 500 today is $-0.81, and current levels of trade show a lower open ahead. HL Camp & Company has their computers set for program buying at $0.44 and set for program selling at $-2.16. Fair value for the NASDAQ-100 today is $3.31.

Treasuries are seeing a round of buying this morning across the major maturities with the 10-year Treasury futures contract (ty03m) $114'050 +0.36% rises 13/32 and has the benchmark bond's YIELD ($TNX.X) falling to 3.907%. In yesterday's market monitor at OptionInvestor.com, I showed an intra-day chart of the 10-year YIELD that showed a head/shoulder top pattern with a YIELD objective of 3.7%. Should the 10-year YIELD meet this type of objective, then I think the major indexes become vulnerable to their WEEKLY S1 levels from our WEEKLY pivot matrix analysis of Dow Industrials 8,026, S&P 500 850, S&P 100 432, NASDAQ-100 1,040 and NASDAQ-100 Tracking Stock (QQQ) $25.35.

Shares of Tommy Hilfiger (NYSE:TOM) $5.89 are jumping to $7.00 over the New York ECNs after the Wall Street Journal speculated that the company may be a takeover target.

Shares of biotech drug maker ImClone Systems (NASDAQ:IMCL) $16.41 are actively traded, but edging lower at $15.92 as the company said it will update the progress of its cancer drug Erbitux tomorrow, but will not issue any detailed data. Reuters also reported that Merck KG&A will update investors on its progress with a clinical trial of Erbitux Friday morning, but will not issue detailed data. A Merck spokeswoman said it would only issue data on the drug at the annual meeting of the American Society of Clinical Oncology in May.

Jeff Bailey

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