NEW YORK, Sept 30 - Stocks are set to dip at Tuesday's open after a sour forecast from network computer maker Sun Microsystems Inc. and another slide in the dollar stirred investor fears over the pace of the U.S. economic recovery. "Sun doesn't help and Sun is clearly a factor, but the macro theme of the weaker dollar versus foreign currencies is going to take its toll," said Arthur Hogan, chief market analyst at Jefferies & Co. "The weaker dollar is a detriment, because it's a reflection of the pace of the U.S. economy. If you think the dollar is worth less than another currency, then you think our economic recovery has slowed."
Investors are also keeping up their guard ahead of economic reports on U.S. consumer confidence and business activity, both due at 10 a.m. (1400 GMT), for further clues on the nation's economy. Last week, a batch of mixed economic reports helped knock the market lower. Equity futures pointed to a lower start on Wall Street. December futures for the S&P 500 shed 3 points to 1,001.20. Futures for the Nasdaq 100 fell 6 points to 1,330, while futures for the Dow industrials lost 22 points to 9,320. Sun Microsystems sounded a sour note ahead of the earnings season, which kicks into high gear in October. The company warned of a larger-than-expected loss in its fiscal first quarter, leading it to record a $1 billion tax charge and revise its fourth-quarter results to a loss. Shares fell before the open to $3.45 from a $3.86 close. The Chicago Purchasing Managers' Index (PMI), due shortly after the open, will offer a snapshot of manufacturing activity in the Midwest. The median forecast for the National Association of Purchasing Management-Chicago Chicago Purchasing Managers' Index is that manufacturing enjoyed a fifth month of expansion but slowed to 57.0 in September from 58.9 in August.
Economists expect the Conference Board to report that its index of consumer confidence inched to 81.8 in September from 81.3 in August. Analysts look at sentiment to determine future patterns of spending, which accounts for nearly three-quarters of the U.S. economy. Other reports on Tuesday include the New York NAPM, which monitors business activity in the New York area.
DOLLAR TAKES ANOTHER HIT
Foreign exchange and earnings worries gnawed at European equity markets and Japanese markets on Tuesday after a big fall in the dollar. The dollar slid to three-year lows versus the yen as optimism grew about Japan's recovery. The greenback was under broad downward pressure in Europe, hitting three-month lows against the euro and Swiss franc as concerns grew about the shape of the U.S. recovery ahead of the U.S. consumer and manufacturing data due later. Wal-Mart Stores Inc. helped offset some of Sun Microsystems' gloom after Monday's close. The Dow component said it would increase total selling space by more than 8 percent next year. Wal-Mart, the world's biggest company by revenue, also reaffirmed its forecast for earnings in the third quarter. Wal-Mart said earnings are "currently tracking in the middle of that range." Shares ended at $57.23. Major market gauges broke a three-session string of losses to end higher on Monday as investors scooped up stocks that were beaten down in last week's slump and fund managers spruced up their portfolios for the end of the quarter.
Tuesday marks the last day of the third quarter, which could bring swings in the stock market as money managers dress up their portfolios by dropping the quarter's losers and adding the winners. //