3 August 2001, 17:28  Good Jobs Report Seen Supporting Stocks

By Cynthia Vespereny
New York, Aug. 3 (BridgeNews) - U.S. stocks are expected to hold steady on the open Friday following the release of a stronger-than-expected jobs report for July by the Labor Department.
Labor said non-farm payrolls fell 42,000 last month, fewer than the 60,000 projected by analysts surveyed by BridgeNews, while the unemployment rate held steady at 4.5%.
"I thought it was surprisingly good," said Steve Wood, chief economist at FinancialOxygen, a capital markets trading vehicle.
"It looks like the pace of decline is slowing," said Wood, noting that besides the smaller-than-expected fall in payrolls, jobs data for May and June were revised upward.
Weakness in manufacturing also was not as bad as expected, said Wood, who believes the Federal Reserve will remain on track to cut interest rates by 25 basis points when its Federal Open Market Committee meets later this month.
A much weaker-than-expected jobs report could have fueled hopes for a larger reduction of 50 basis points or even an intermeeting cut, experts said.
"Today's employment report is probably the most important economic release ahead of the next FOMC meeting on August 21," Bear Stearns economists said in a research note. S&P 500 futures fell 3 to 1223, or 1 below fair value. Dow futures were flat at 10575, or 4 above fair value. Nasdaq 100 futures dropped 16 to 1759, compared to fair value of 10760. The Nasdaq 100 Pre-Market Indicator was off 0.4% to 1744.93.
In pre-market trade, Network Appliance (NTAP) was the most active Nasdaq stock, off nearly 1% to 15.16. Cisco Systems (CSCO) was down 1.5% to 19.94, and PMC Sierra (PMCS) fell 0.6% to 36.64.
On the ratings front, Morgan Stanley cut Motorola (MOT) to outperform from strong buy. In pre-market trade, its shares slipped to 18.95 after closing at 19.40.
First Union lowered both Radio One (ROIA) and Cox Radio (CXR) to buy from strong buy, as well as price targets and earnings estimates. CS First Boston reduced Descartes Systems (DSGX) to buy from strong buy, along with its profit estimates and price target.
Tyco International (TYC) agreed to acquire Sensormatic Electronics Corp. (SRM) for $2.3 billion, including $116 million of debt. Sensormatic shareholders will receive Tyco common shares valued at $24 for each share of Sensormatic.
Dial Corp. (DL) said its board of directors decided Thursday that the company would fare better as part of a larger enterprise.
"While no serious discussions for the entire company have taken place, interest has been expressed for pieces of the business -- although selling pieces would not be the most tax efficient approach for our shareholders," the company said in a press release.
"Nevertheless, the Board is committed to reviewing potential opportunities, including ones that involve multiple parties."
Stocks ended higher Thursday, bolstered by strong gains in the chip and computer hardware sectors after Intel's chief executive officer said the PC industry should rebound in the third and fourth quarters.
The Dow Jones industrial average closed up 41.17, or 0.39%, to 10,551.18, and the Nasdaq Composite index rose 19.00, or 0.92%, to 2087.38. The S&P 500 was up 4.82, or 0.40%, to 1220.75.
U.S. September Treasury bonds were lower by 15/32 at 102 22/32. The yield on the 10-year Treasury note was up 0.042 at 5.191%, while the rate on the 30-year bond was up 0.024 to 5.599%. Light sweet crude oil futures slipped 9 cents to $27.62 a barrel.

Overseas markets were mostly lower overnight. Japan's Nikkei 225 fell 157.23, or 1.3%, to 12241.97. Hong Kong's Hang Seng Index declined 197.29. or 1.6%, to 12269.08. In Europe, the FTSE 100 Index recently was down 41 to 5543, and the French CAC 40 Index was off 21 to 5068. The German Dax rose 19 to 5796. The dollar was last higher against the euro at 87.91 cents and stronger against the yen at 123.94 yen to the greenback.

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