Tech stocks pace pre-market slide; econ data as expected
U.S. stocks are expected to open lower, extending Wednesday’s downside rout as tech stocks were on the defensive overnight and banking shares remain on wobbly footing despite decent results from JP Morgan. A fresh batch of economic data on jobless claims and inflation was basically in line with expectations and appeared to be somewhat supportive to stocks. The Dow is expected to open down 50 points, while the Russell 2000 (NYSE:IWM) is seen down 0.6%, near 450.50.
The weekly claims report came in at 524,000, which was near the projection of 520,000. Meanwhile, the PPI number was at minus 1.9%, also reasonably close to the consensus guess of minus 2.0%. In addition, the NY Manufacturing survey was at -22, slightly better than the forecast of -25. Stock index futures initially moved moderately higher off the economic headlines.
Technology bellwether Apple Inc. (Nasdaq:AAPL) was off some 7% in pre-market trading amid reports that CEO Steve Jobs would take a medical leave of absence. Elsewhere on the tech front, Intel Corp. (Nasdaq:INTC) is slated to release results today and the stock was off about 1% in European trading.
JP Morgan Chase and Co. (NYSE:JPM) reported better-than-expected earnings results, and the stock took turns rallying and retreating in pre-market trading. Despite the bullish JPM profit news, bank stocks in general were a major drag on the market Wednesday and could trouble again today with Bank of America (NYSE:BAC) saying they need more capital to absorb the Merrill Lynch operation.
In overseas action, Europe shares were off, with the U.K. small-cap index down about 1.3% despite a 50-bp rate cut from the European Central Bank, which helped support the U.S. dollar ahead of the opening here.
The chart picture for small caps has rolled over into a bearish posture within the extended sideways consolidation. The market appears set to test key support early today at 450; sustained action below 450 would suggest further downside probing in the days ahead. If the market can right the ship, look for resistance at 461, 466 and 473. Below 450, support is at 444 to 442. The area around 444 matches with a downside target off a little rectangular breakout on intraday chart studies.
