How's tech sector looking? And more importantly, what are the prospects for IT spending in the months to come? Investors will be looking for IBM's earnings after the bell to help provide an answer to those questions.
The Dow and NASDAQ have flattened out ahead of Big Blue's quarterly announcement, which is the first report from a major tech company for this earnings cycle. Former high-flyer Juniper (JNPR) gave tech bulls a glimmer of hope last week when the networking company beat analyst expectations for the first-quarter, which had already been raised following a strong Q4 report.
The Multex estimate for IBM is 80 cents per share. Some analysts have speculated that the company might have a tough time meeting that figure, thanks to continued weakness in the IT sector and uncertainty related to the war. But now that the hostilities in Iraq are drawing to a close, Wall Street will be far more concerned with what IBM has to say regarding its forward-looking guidance. Any major surprises could take the NASDAQ out of its recent trading range. Of course any major reaction to IBM's report might be dulled by anticipation of earnings from MSFT and INTC, who report tomorrow afternoon.
60-minute chart: NASDAQ
If IBM misses earnings and/or predicts future weakness, investors will be looking for some bearish confirmation from Softee and Intel. Likewise, positive comments wouldn't carry as much weight if they weren't echoed by the other two tech giants. Intel's announcement could be particularly important with the semiconductor index (SOX.X) hovering just above support at its 50-dma.
Every Dow component is trading in the green, with the exception of MMM, T, and MCD. Shares of AT&T ($13.84, -0.18), currently featured as a short play on our PremierInvestor stock section, have tanked to 19-year lows. There's no apparent news to explain this relative weakness. Meanwhile, Altria (MO) is seeing some volatility ahead of a key court decision related to the Illinois class-action litigation that's plagued the company in recent months. A state judge will rule on whether Altria will have to post a $12 Billion (with a capital "B"!) bond to appeal a 10.1 Billion verdict. MO has trended higher over the past two weeks but now faces potential resistance at its recent trend of lower highs.