22 July 2004, 14:53  US stocks seen little changed; Microsoft awaited

U.S. stocks are seen little changed at Thursday's open as investors debate the outlook for corporate profit growth. On the heaviest day yet for second-quarter earnings reports, investors are looking to Microsoft Corp. , the world's largest software maker, to report strong earnings in and give positive guidance about the second half of the year. Microsoft reports after the bell. Quarterly results and outlook from companies reporting so far have not been enough to overcome investor concerns that profit growth across the board could slow in the second half. Shares in Internet auctioneer eBay Inc. traded at $72.29 in Frankfurt on Thursday, down nearly 6 percent from the New York close, after it disappointed investors with a lower-than-expected full-year earnings forecast.
"There's still a negative tone in the U.S.," said Geoff Langham, head of trading at CMC group in London. "The market is definitely focusing on the bad news in the technology sector. Earnings growth has been good but the outlook hasn't been so positive," he added. S&P 500 futures for the September contract rose 1.10 points to 1091.6, or 1.45 points below fair value, accounting for dividends, interest rates and time to expiration on the contract. Dow Jones industrial index futures rose 8 points, while Nasdaq 100 futures fell 2 points. EBay results for the June quarter slightly topped analysts' average estimates, but investors reacted to the cautious forecast and eBay's view that sales of merchandise on its Web site were settling into a seasonal pattern typical of mature retailers. Other quarterly reports are expected from Caterpillar , McDonald's and Coca-Cola .
IN THE NEWS
The No. 2 U.S. bank, JP Morgan Chase & Co. , may be active after dealers said UBS reduced its rating on the bank to "neutral" from "buy" and cut its price target to $39 from $45. In corporate news, the ouster this week of David Pottruck as chief executive of Charles Schwab Corp. is leading investors and analysts to wonder whether the discount brokerage might put itself up for sale, The Wall Street Journal said. Among the potential buyers for Schwab are Merrill Lynch & Co. , Ameritrade Holding Corp. , E*Trade Financial Corp. and Canada's Toronto-Dominion Bank , which owns online brokerage firm TD Waterhouse, the newspaper said. Wireless technology provider Qualcomm Inc. may gain after it posted a profit on Wednesday that more than doubled on demand for advanced cell phones and raised its financial forecasts on expectations of continued growth in next-generation networks. Starbucks Corp. on Wednesday reported its quarterly profit rose 44 percent, boosted by strong U.S. sales gains and improving international performance, and raised its full-year profit target, adding that its drink prices were likely to rise next year///

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