Google Declines on Forecast

Elena
08 Mar, 2006
New York City

U.S. stocks started lower Wednesday hurt by worries about interest-rates increases as the 10-year Treasury note jumped to 4.75%. Unauthorized information on profit and sales projections was released by Google which led tech stocks to the downside.

9:45AM- U.S. Treasury debt yields held near 21-month highs
U.S. stocks were weak at opening, dragged by lingering concerns over interest-rate hikes, provoked by a sharp jump in the 10-year Treasury note which rose to 4.75%. In addition, fears that central banks in Japan and Europe will raise interest rates, further weighed on sentiment building on worries that rising rates could lead to a slowdown in economy as loans would be harder to get for consumers and businesses. Meanwhile, bonds could take advantage of the situation and become more attractive than equities, draining money away from stocks. A stream of weakness flowed from the tech sector as Google fell 2.3% to $356.06 after the Web search company released unauthorized information on profit projections on its Web site.

In the first hour of trading, the Dow Jones industrial average fell 13.29, or 0.12 %. The S&P 500 index fell 3.14, or 0.25%, and the Nasdaq composite index fell 7.53, or 0.33%.

9:00AM – The tech sector hurt stock futures as Google released internal sales projections.
U.S. stock futures pointed to a lower start of Wednesday session as continuous interest-rate hikes concerns kept investors nervous. The treasury yields had a flat performance Tuesday as the bond market stabilized. The 10-year Treasury note advanced early Wednesday to hover round a 52-week high. The tech sector weighed for second day in a row with Google in the spotlight. Google lost ground before the opening bell after it unwillingly released internal sales projections on its investor website. A further decline in crude oil prices failed to bring cheer to the market.

8:30 AM A Couple of Companies Reverse to Profit
Covansys Corp., ((CVNS)), provider of consulting and technology services, reported Q4 earnings of 25 cents a share, up from a profit of 24 cents a share a year-ago on revenue growth. The company also added it has got over all material weaknesses identified in its assessment of internal controls for 2004.

Powell Industries, ((POWL)), electrical energy equipment maker, reported it reversed to a Q1 profit of 10 cents a share on 76% revenue growth. The company is set to report Q2 earnings between 8 cents and 12 cents a share and 2006 earnings between 45 cents and 55 cents a share, incorporating stock option expenses. Revenue is anticipated to be between $300 million and $325 million.

Dynegy Inc, ((DYN)), power generator, reported Q4 net income of 75 cents a share, swinging from a loss of 46 cents a share year-ago. Q4 profit reflected income from discontinued operations of $1.74 a share. The company''s loss from continuing operations increased to 98 cents a share, from 60 cents a share. Dynegy topped analysts’ forecasts for a quarterly loss of 12 cents a share.

Six Flags, ((PKS)), theme park operator, reported a Q4 loss of $1.55 a share, down from a loss of $1.24 a share year-ago despite revenue growth. On a continuing operations basis, the company lost $1.31 a share, down from a year-ago loss of $1.20 a share. The company missed analysts’ estimate for a loss 73 cents a share. The company added attendance slipped 1% in Q4 to 3.6 million, and operating costs and expenses grew 12%.

Gander Mountain Co, ((GMTN)), outdoor products retailer, reported Q4 earnings of $1.45 a share, up from a profit of $1.21 a share a year-earlier on sales growth, topping analysts’ estimate for a profit of 87 cents.

8:00AM Asian markets extended weakness ahead of BOJ meeting.
Asian-Pacific benchmarks closed Wednesday session lower to extend recent weakness. Stocks declines on cautiousness as the Bank of Japan started re-examining the monetary policy with the Nikkei losing 0.8%. Across the region, Shanghai Composite was the biggest loser, falling 1.6%, followed by South Korea’s Kospi, down 1.1%, and Taiwan Weighted index, down 0.4%. The dollar bought 117.54 yen, down 37 yen.

European stocks were weak at mid-day dealings, rebounding from earlier gains with investors eyeing strong earnings news. Mixed close of U.S. markets overnight also contributed to the general weakness. The German DAX 30 led losers with a decline of 1.3%, followed by the French CAC 40, down 1.1%, and London FTSE 100 falling 1.1% on lower mining stocks.