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U.S. Stocks Headed Lower; Warnings Weigh on Tech Shares

Wednesday, March 2, 2005 07:03 EST

NEW YORK (Reuters) - U.S. stock futures pointed to a lower market open on Wednesday, with tech shares weighing on Wall Street after profit warnings from two software makers.

TIBCO Software Inc. said on Tuesday that fiscal first-quarter profit and revenue will likely miss forecasts, while business software maker Verity Inc. said it too would miss analysts' expectations. Meanwhile, earnings at Costco Wholesale Corp. rose nearly 35 percent on a 10 percent increase in sales, but the largest U.S. warehouse club's profit missed analysts' expectations by a penny per share.

S&P 500 futures slid 2.6 points, below fair value accounting for interest rates, dividends and time to expiration on the contract, indicating the S&P would open lower.

Dow Jones industrial index futures fell 22 points, while Nasdaq 100 futures were 6.5 points lower.

"European shares are declining and we had some profit warnings that is weighing on sentiment," said Christopher Sparke, senior dealer at Binexx.com. "You also could be seeing some profit taking after yesterday's rally."

Shares of Novellus Systems Inc. , a maker of semiconductor manufacturing equipment, were 3.5 percent lower in overseas trading on concerns of weakness in the Japanese market and lower gross margins.

TIBCO shares fell 14 percent after hours on Tuesday and Verity's stock lost 10 percent.

Investors will also keep a close watch out for Federal Reserve Chairman Alan Greenspan, who is scheduled to testify on the economic outlook and current fiscal issues before the House Budget Committee at 10 a.m. (1500 GMT).

Oil prices hovered below $52 a barrel on Wednesday, as forecasts for lower U.S. heating oil stocks and freezing weather boosted demand for products.

U.S. light crude futures slipped 10 cents to $51.58 a barrel in New York, after hitting a four-month high of $52.28 on Monday. Rising oil prices have raised concerns that higher energy costs will pinch corporate profits and curb consumer spending.

U.S. stocks rallied on Tuesday, as a brokerage upgrade on the semiconductor sector and strength in pharmaceuticals such as Johnson & Johnson helped the market rebound from a sell-off on Monday.

Caterpillar Inc. also helped the Dow on Tuesday, rising 2.4 percent, or $2.32, to $97.37 after the heavy equipment maker said it will increase machinery and engine prices due to rising costs of steel and other raw materials.

The Dow added 63.77 points, or 0.59 percent, to end at 10,830.00. The S&P 500 rose 6.81 points, or 0.57 percent, to finish at 1,210.41, and Nasdaq gained 19.53 points, or 0.95 percent, to close at 2,071.25.

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