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MARKET PREVIEW: Economic news holds sway

A flood of economic news will move the markets Friday, but don't expect too much since the Federal Reserve meets next week. The Dow is set to open flat to slightly higher.

Reports on retail sales, inflation and consumer sentiment will all hit U.S. investors Friday. All three reports will be closely scrutinized by Fed watchers. The Federal Reserve meets Tuesday, and another half-percentage point cut to interest rates is widely expected. The central bank's policy makers have cut rates four times so far this year, by a half point each time, in attempts to support the sagging economy.

Retail sales for April are expected to show a modest increase of a 0.2 percent from the prior month. That's an improvement from the 0.2 percent drop in March.

The producer price index for April is expected to show a small rise of 0.3 percent in inflation at the wholesale level -- although the jump could be greater than expected after the sharp spike in gasoline prices in recent weeks.

The University of Michigan's consumer sentiment index will also come out Friday, and is expected to be 88.5, up slightly from 88.4 in April.

Stocks to Watch

  • Electronic Arts Inc. (Nasdaq: ERTS), a video-game software maker, said it lost 9 cents a share for its fourth quarter, excluding one-time items. That's much better than the 14 cents predicted by First Call. With one-time expenses on developing more online games and software, the company said it had a loss of 13 cents a share.

    Management also told analysts to expect revenue in fiscal 2002 to grow in the midteens on a percentage basis.

  • Pixar (Nasdaq: PIXR), which makes animated movies, also reported earnings. The company said its first-quarter profit was 16 cents, beating the 12-cent average estimate of analysts surveyed by First Call. Pixar raised this year's earnings forecast to between 40 cents and 55 cents a share from an earlier estimate of 30 cents to 50 cents. First Call's full-year estimate for Pixar had been 42 cents a share.

  • Altera (Nasdaq: ALTR) could get some attention after a federal judge reversed a jury verdict and ruled that the chipmaker did not infringe on two patents that belong to rival Xilinx (Nasdaq: XLNX).

    The jury had concluded in November 2000 that Altera's Flex 8000 chip products violated Xilinx patents known as "Freeman" and "Carter." U.S. District Judge James Ware of San Jose, who presided over the original trial, reversed the finding. Altera fell 60 cents to $26.05. Xilinx rose 11 cents to $43.41.

  • StarMedia Network (Nasdaq: STRM) said its first-quarter loss narrowed to 46 cents a share from 54 cents a year earlier and announced it will cut 25 percent of its employees. The company had about 779 full-time workers as of Dec. 31. Chief Executive Fernando Espuelas reiterated that the company would break-even in the fourth quarter.

    At the Bell

    The Dow Jones industrial average may open 4 points higher. The Standard & Poor's 500 index for June futures contracts was up 0.5 points to 1,261 at 7:15 a.m. EDT in 24-hour electronic trading.

    Reuters contributed to this report.