MARKET PREVIEW: Tech gains ahead?

3 min read

Techs should accelerate Thursday after getting the green light from the Federal Reserve's downshift to "neutral" on its interest rate bias. Asia and Europe hitched a lift on U.S. gains, and the Dow is set to open flat.


The Federal Reserve Open Market Committee was on the mark Wednesday when it moved the interest rate up 25-basis points to 5 percent. And then it surprised markets by announcing it had changed its policy bias from tightening to neutral, indicating it is unlikely to boost rates again in the near future.

Those most likely to speed down the open road are the high tech IPOs on deck for Thursday. Ask Jeeves (proposed ticker: ASKJ) and Commerce One (proposed ticker: CMRC) are set to be in the lead.

In other tech news, Microsoft Corp. (Nasdaq: MSFT) is under investigation by the Securities and Exchange Commission for accounting practices. The inquiry was sparked by a wrongful dismissal suit filed in 1997 by a former internal auditor, who charged the company had set aside millions of dollars in order to keep a steady state earnings model. The trial will likely have little effect on the world's most valuable company.

The SEC is also investigating the possible effects of night trading. It met with the New York Stock Exchange, the Nasdaq Stock Market's parent organization and Wall Street firms Wednesday to begin its study.

Microsoft isn't the only big bad tech Goliath. Another probe on the undersea cable business is to be initiated by the Federal Communications Commission, joining the Justice Department in its antitrust investigation. Both are responding to charges by Global Crossing Ltd.(Nasdaq: GBLX) that consortia led by AT&T Corp.(NYSE: T), MCI Worldcom Corp.(Nasdaq: WCOM) and Sprint Corp.(NYSE: FON) are preventing international calling rates from going down.

In economic indicators to be released today, initial jobless claims for the week to June 26 are expected to be up 3,000 to 305,000. The June purchasing managers survey is expected to measure 54.8 compared with May's 55.2. Any reading above 50 indicates economic expansion.

Expect the following technology stocks to be among Thursday's most actively traded issues: CompUSA Inc. (NYSE: CPU), e-Net Inc. (Nasdaq: ETEL), iVillage Inc. (Nasdaq: IVIL), Komag Inc. (Nasdaq: KMAG),) and VerticalNet Inc. (Nasdaq: VERT).

The Federal Reserve Board's decision to raise interest rates by one-quarter of a percent and move toward a "neutral" bias ignited Wall Street in late trading Wednesday. The Nasdaq composite stormed up 41 points to a record high of 2,686.41 while the Dow shot up 155 points.

At the Bell

The Dow Jones industrial average is set to open flat. The Standard & Poor's 500 index for June futures contracts was down 0.5 points to 1381 at 7:35 a.m. EST in 24-hour electronic trading.


Trading in Asia lifted on U.S. gains. The Nikkei 225 rose 1.89 percent to 17,860. Singapore's Strait Times index rose 2.17 percent to 2,214 and Hong Kong's Hang Seng was closed for a public holiday.


European markets also surged on the cork-popping news. London's FTSE 100 jumped 1.88 percent to 6,437. The CAC 40 in Paris gained 2.10 percent to 4,631 and the Xetra DAX in Frankfurt rose 1.60 percent to 5,424 at 6:40 a.m. EST.