Market Insider/Friday Look Ahead
CNBC Executive News Editor
Stock investors may be able to pay attention to at least some fundamentals Friday if the relative calm of Thursday's close is any indicator for Friday's action. (Note I said "relative" after the perfectly stormy day for Wall Street Thursday.)
Earnings news from Qualcomm could be a negative for tech stocks, and oil will be a key market to watch.
Oil prices were moving higher in Thursday evening trading after the stock market showed some signs of stabilizing. Crude was lower during market hours on concerns demand would be crimped by a slowing economy after comments from Fed Chairman Ben Bernanke that growth is slowing and will continue to be slow into next year.
A violent storm in the North Sea could also impact energy prices as British forecasters warned of the worst swells in 20 years. Oil platforms are shut down and authorities say the important port of Rotterdam will be closed for the first time since it was constructed in the early 1990s.
Chipmaker Qualcomm's disappointing earnings report could impact tech on Friday. The company reported profits of $1.13 billion or $0.67, a cent ahead of analysts' estimates. But the company also forecast 2008 earnings below analysts' average forecast because of lower than expected handset demand. Its stock was lower in after hours trading Thursday.
International trade and import and export prices data is reported at 8:30 a.m. eastern time, and consumer sentiment is due at 10 a.m.
"I personally think import prices is going to be a very important number," said CNBC's Rick Santelli. "China specifically, since May, has been trending higher every single month. The prices we are paying for their goods keep going up. The weak dollar will also cause the import prices from many places other than China to keep trending up as well."
Speaking of China, Treasury Secretary Hank Paulson in a speech in New York Thursday evening reiterated the call for China to move soon on the economic reforms necessary to allow the yuan to float. He also reiterated his view on the dollar.
"In terms of the dollar, you've heard me say, and it's easy for me to say given my background on Wall Street, that a strong dollar is in our nation's interest and again the currency value should be determined competitively, based upon economic fundamentals," Paulson said.
Rock n Roll
Stocks ended a second day of wild-eyed turbulence Thursday with just a 33-point decline in the Dow. That doesn't sound like much unless you were watching the dramatic selling wave, and then reversal, that took the Dow down more than 200 points before crossing back up into positive territory. The S&P closed 0.85 lower at 1474.
But the day's big story was the meltdown at the Nasdaq which closed down a steep 52.76 points, or 1.92% as selling took gains out of tech stocks across the board. The Nasdaq at one point was down 100 points. If it had closed at that level, it would have been the first 100 point move since 2001.
Cisco finished the day down a gut wrenching 9.5%. "The guidance wasn't raised so the stock sold off," said Vince Farrell, managing director at Scotsman Capital. Farrell says that Cisco has been down over the last couple years more than than half the time on the day after it reports earnings, and it usually beats estimates.
Tech darlings like Google and Apple all saw big declines as investors pulled profits from the stocks that have been the biggest winners lately. Thursday certainly was tech's turn. As other sectors have crumbled lately, tech has held on. "Maybe tech had to give up the ghost because it had acted very well," said Farrell, a CNBC contributor. Farrell also commented that the type of selling in tech felt similar to another earlier, big selloff this year. "Large cap liquid names, reasonably valued, were the ones that got killed because that's what the hedge funds could sell," he said.
The S&P tech sector ended the day down 3.88%. The financial sector, also put through the mill during the session, bounced back to gain 0.45%. The best performer was again old reliable, the defensive utilities sector, with a 2.03% gain. Energy was also strong, up 1.51%.
The dollar was at another record low against the euro Thursday, falling 0.3%, and in the credit markets, the flight-to-quality continued as spreads widened. Late in the day Thursday, the 10-year Treasury was yielding 4.274% and the two year- was at 3.460%.
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