U.S. stocks are set to open near unchanged on Tuesday, following losses in the previous session, as investors weigh prospects for the volatile technology sector. Microchip maker Texas Instruments Inc. raised its first-quarter earnings and revenue targets late on Monday, due to strong demand across a broad product range, but its shares fell after the bell. Meanwhile, the top two contract microchip makers, Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. , posted sharp gains in February sales early on Tuesday, hitting the top end of analyst forecasts.
That comes on top of forecasts on Monday from International Data Corp., predicting strong growth in chip sales this year, but slower growth through 2008. U.S. investors are now weighing whether technology stocks, which led the stock market rally last year, are overpriced. "Texas Instruments was generally positive, that could drag the rest of the sector up," said Tom Schrader, managing director of U.S. equity trading at Legg Mason Wood Walker. "But there's a lot of cross-currents out there, with oil prices trending higher. That could cause a little fear of inflation." Stock futures on the S&P 500 were trading slightly higher early on Tuesday, but below fair value, pointing to a flat or weaker opening.
Technology shares weighed the market down on Monday, with the tech-laden Nasdaq Composite Index <.IXIC> dropping 38.85 points, or 1.90 percent, to 2,008.78. The Dow Jones industrial average <.DJI> ended down 66.07 points, or 0.62 percent, to 10,529.48. The Standard & Poor's 500 Index <.SPX> eased 9.66 points, or 0.84 percent, to 1,147.20. Texas Instruments Inc. , the largest maker of chips for cell phones, will be the focus of tech trading. Late on Monday it revised first-quarter earnings and revenue targets to the higher end of its estimates, reflecting broad product strength. Other stocks to watch include J.P. Morgan Chase & Co. , after Manhattan District Attorney Robert Morgenthau asked banking regulators to examine documents to establish if the bank violated "know your customer" rules, according to a story in The Wall Street Journal. Halliburton Co. could be under pressure after it said it could be formally audited by the U.S. Department of Defense in the "near future" for procurement issues related to its work in Iraq and that a review could "adversely affect" its liquidity, according to a regulatory filing on Monday.///