Message-ID: <24660107.1075852563098.JavaMail.evans@thyme> Date: Thu, 27 Sep 2001 06:29:53 -0700 (PDT) From: schwabalerts.marketupdates@schwab.com To: jeff.dasovich@enron.com Subject: Morning Market View for September 27, 2001 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Schwab Alerts X-To: Dasovich, Jeff X-cc: X-bcc: X-Folder: \JDASOVIC (Non-Privileged)\Deleted Items X-Origin: Shankman-J X-FileName: JSHANKM (Non-Privileged).pst Charles Schwab & Co., Inc. Morning Market View(TM) for Thursday, September 27, 2001 as of 9:30AM EDT Information provided by Schwab Center for Investment Research ================================================================ SOFTER OPEN FOR STOCKS Equity index futures are pointing to a weaker open for stocks as Treasuries had a muted reaction to the release of this morning's durable goods and initial jobless claims data. The data were generally in line with expectations, reflecting continued weakness in the manufacturing sector and a growing number of unemployed workers. In energy news, Reliant Resources Inc. (RRI,16.68,f4) reported that it would acquire Orion Power Holdings, Inc. (ORN,19.20) for $4.7 billion in cash and the assumption of debt. Reliant said the deal will enhance earnings as soon as it is closed, which is expected at the beginning of 2002. The acquisition would enable Reliant to expand its presence in the independent power production market, and the company expects to earn $2.05-$2.15 per share in 2002, assuming the deal goes through. The company confirmed earlier 2001 profit forecasts of $1.60-$1.70 per share. Network equipment maker Sonus Networks Inc. (SONS,6.40,f1) warned that it expects to report a 3Q loss of $0.05-$0.07 per share, excluding items, well below the First Call consensus of a $0.01 per share profit due to languishing demand for telecommunications products. Sonus said it will take a charge of as much as $31 million for an unspecified amount of job cuts and facilities closures, as well as a non-cash charge of $435 million related to writedowns. The company now anticipates a fiscal 2001 loss of $0.08-$0.10 per share, down from its previous $0.03-$0.04 per share profit forecast. ---------------------------------------------------------------- TREASURY AND ECONOMIC SUMMARY Bonds were higher in volatile trading following the release of this morning's economic data. According to the Commerce Department, durable goods orders for August declined 0.3%, in line with analysts' expectations per Dow Jones Newswires, but July's 0.7% decline was revised lower to a 1.1% decline. Excluding transportation, durable goods orders actually rose 0.4% as transportation orders showed the largest drop of all the components. Orders for communications equipment and semiconductors were notably higher. Overall, the stale report reflects continued weakness in the manufacturing sector. According to the Labor Department, jobless claims for the week of Sept. 22 were basically in line with analysts' expectations per Dow Jones Newswires, up 58,000 to 450,000 after the prior week's data was revised higher to 392,000 claims. The four-week moving average of claims rose to 422,000 and continuing claims rose to 3,298,000 reflecting the recent onslaught of layoff announcements. The week following the terrorist attacks may have been distorted due to seasonal effects and the initial shock-induced apathy associated with the attacks. ---------------------------------------------------------------- WORLD MARKETS The Bloomberg European 500 Index was slightly lower, down 0.09% as of 8:55 a.m. EDT. Computer-related shares sold off on the heels of yesterday's pessimistic analyst calls in the U.S. on several technology and chip names. Chemical shares were also lower after BASF AG (BFASF,29) said that it may fall short of its previous growth estimates for the next few years as the economy wanes. Adding to the pessimism, a French business confidence report for September reflected a worse-than-expected decline in sentiment in the manufacturing industry. Defensive issues such as energy, utility and drug stocks were higher. Japan's Nikkei-225 Index led Pacific Rim stocks higher, closing up 0.57% on strength in oil, communication and transport stocks. Exporters were also higher after the Bank of Japan continued its recent series of currency interventions to weaken the yen. The European Central Bank also confirmed that it was buying euros against the yen on behalf of the BOJ. The U.S. dollar was sharply higher against the yen and modestly higher against the euro in early trading. Meanwhile, chip stocks fell after Goldman Sachs reduced its profit estimates yesterday for Intel Corp. (INTC,21,f1&f4). Bargain hunters pushed crude oil prices higher even as OPEC agreed to keep oil production unchanged. ---------------------------------------------------------------- FUTURES WATCH In the December Globex futures contract as of 8:55 a.m. EDT, the S&P 500 Index was down 3 points (2 points above fair value), while the Nasdaq 100 Index was down 15 points (6 points below fair value). The December DJIA futures contract was down 15 points (9 points below fair value), and the October crude oil futures traded on the NYMEX were up $0.30 at $22.68/barrel. 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