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.
TYCO TO BUY SENSORMATIC
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.
FOREIGN EXCHANGES
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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