US MORNING BRIEFING: Stocks Seen Lower As Investors Eye ISM

Last Update: 2/5/2008 6:31:26 AM

DJIA Futures 12,602.0 -10.0 -0.1%
S&P 500 Futures 1378.4 -0.4 -0.0%
Nasdaq Futures 1828.8 +2.0 +0.1%
Above are as of 0611 ET

FTSE 100 6003.7 -22.5 -0.4%
Xetra DAX 6965.6 -34.9 -0.5%
CAC40 4940.6 -11.4 -0.7%
Above are as of 0558 ET

Nikkei 225 13745.5 -114.2 -0.8%
Hang Seng 24,808.7 -223.4 -0.9%
Above are closing prices

SNAPSHOT:

-U.S. stocks seen lower; Treasurys seen broadly lower; Brent crude lower; gold
lower.

-Watch for OECD CPI at 0600 ET; ICSC-UBS chain store sales at 0745 ET; Monetary
Reserves, in U.S. dollars at 0815 ET; Redbook Retail Sales Index at 0855 ET;
Treasury Undersecretary McCormick holds press conference on the G7 fin mins’
meeting at 1000 ET; Treasury Secretary Paulson testifies before the Senate
Finance Committee on the president’s fiscal-year 2009 budget proposal in
Washington at 1000 ET; ISM Non-Manufacturing Business Index at 1000 ET; Super
Tuesday primaries and caucuses.

-Dollar higher; bunds, gilts mixed.

-Euro-zone January services PMI 50.6 vs 53.1 in December.

U.S. MARKETS OUTLOOK:

Stocks are expected to open slightly lower Tuesday as investors await ISM data
for further direction, said Joshua Raymond, a trader at U.K. spreadbettor
Finspreads.

“It really is a pause for breath,” said Raymond. “The market will react in turn
(to the ISM data), especially if it is weak.”

Elsewhere on the economic calendar, investors will closely watch chain store
sales at 0745 ET and Redbook retail sales at 0800 ET.

At 0611 ET S&P 500 futures were down 0.4 points at 1378.4, Nasdaq 100 futures
were up 2 points at 1828.8 and the Dow industrial futures were down 10 points at
12,602.

EQUITIES:

SiRF Technology Holdings Inc. (SIRF) stock plummeted 38% in late trading Monday
and is down 32% in Frankfurt after the GPS chipmaker’s earnings came in well
below Wall Street’s expectations.

Boston Scientific (BSX) shares may be active after the company predicted
higher-than-expected first-quarter earnings. Shares jumped 7% in after-hours
trading Monday and the stock is currently up 4% in Frankfurt.

Elsewhere, Yahoo Inc (YHOO) is examining ways of unlocking the value of its
assets in China and Japan to help appease disgruntled shareholders inclined to
accept Microsoft’s offer for the company, the Financial Times reported on its Web
site Monday, quoting an unnamed source. Meanwhile, Banc of America Securities has
downgraded Yahoo to neutral from buy, but increased its price target to $31 from
$26. Yahoo stock is down 1.26% in Frankfurt.

National Semiconductor (NSM) may come under pressure after it announced late
Monday it had lowered its third-quarter sales outlook. Its stock in Frankfurt is
down 5.72%.

On the earnings calendar, investors will keenly watch Disney’s (DIS) report to
see the extent to which the media company has been affected by the writers’
strike.

FOREX: The dollar appears to be staging its long-awaited comeback in European
trading, particularly against the euro and the yen. At 0530 ET, the dollar was at
Y107.58, up from Y106.75 late Monday in New York, while the euro had fallen to
$1.4690 from $1.4831. The pound fell to $1.9682 from $1.9742.

BONDS: U.S. Treasurys are expected to open broadly lower in New York after slow
trading sessions in both Asia and Europe. In London, the two-year note is
unchanged at 100 3+/32, to yield 2.07%, and the 10-year note is down 4/32, at 104
26/32 to yield 3.666%. The 30-year bond is down 14+/32, at 109 25+/32 to yield
4.401%.

The European credit market is weaker, with spreads wider on credit derivatives
indexes wider after U.S. stocks closed lower. Corporate earnings and U.S. data,
including the ISM non-manufacturing index, may give direction to a market that
will keep one eye on the monoline bail-out story, strategists say.

COMMODITIES: Crude oil prices are lower as the market looks ahead to Wednesday’s
Department of Energy stock data in an absence of other fundamental news. “It
looks like crude oil stocks have gained again last week - that should bring some
more pressure on oil prices,” says Andy Sommer, analyst at HSH Nordbank. Concerns
about a U.S. recession maintain a bearish theme for prices, he adds, while the
strengthening U.S. dollar is also weighing on crude.

At 0533 ET, ICE March Brent crude is down 84 cents at $89.63 a barrel, while
Nymex March WTI is down 88 cents at $89.14/bbl.

Spot gold is continuing to slide, along with other precious metals, and market
participants expect the dip to continue. The U.S. dollar is firmer against the
euro and analysts predict the greenback will rebound in 2008, leading to lower
precious metal prices. “Market sentiment is turning, as illustrated by Friday’s
drop in prices,” said a London-based trader, adding the turn downward was a “key
one-day reversal” and very bearish for the market. At 0533 ET, spot gold was at
$888.65 a troy ounce, down 2.7% from late Monday in New York, while silver was at
$16.48/oz, down 2.5% from Monday’s high.

=======TODAY’S CALENDAR=======
ET COUNTRY/PERIOD

0745 US Feb 2 ICSC-UBS Chain Store Sales
0855 US Feb 2 Redbook Retail Sales Index
1000 US Tsy Undersecy McCormick holds a press
conference on the G7 fin mins’ meeting
1000 US Tsy Secy Paulson testifies before the Senate
Finance Committee on the president’s fiscal-
year 2009 budget proposal in Washington
1000 US Jan ISM Non-Mfg Business Index
1200 US Tsy Undersecy Steel speaks at the American
Securitization Forum conference in Las Vegas
1200 US Richmond Fed Pres Lacker speaks on the
economic outlook in Charleston, W.Va.
1700 US Feb 3 ABC/Washington Post Consumer Confidence Index

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