International Markets: New York - Stocks and bonds set to fall

US STOCKS may fall this week as companies warn that 1998 profits will fall short of lofty expectations. A slew of large companies will report on last quarter's earnings, including AT&T and General Motors on Monday and Coca-Cola and Gillette on Wednesday.

The outlook for bonds is also clouded, dragged down by a plunging dollar, allegations that President Bill Clinton asked a White House intern to lie under oath, and signs of stability in Asia. "Add all of those together and they don't present a very good argument for buying bonds," said David Duerson, at BancAmerica Robertson Stephens.

The benchmark 30-year Treasury bond yield rose 11 basis points on Friday to 5.97 per cent, the biggest one-day loss since 28 October. The dollar tumbled to a two-month low against the yen on signs that Japan's government will take more measures to help the economy out of a six-year slump.

"Weakness in the dollar is a clue for foreign investors to sell our market and bring money home," said Neil Toth, bond manager for the Ohio Public Employees Retirement System.

Stocks struggled last week as companies such as IBM and Sears Roebuck reported fourth-quarter earnings that generally met expectations, yet warned of 1998 profit shortfalls prompting analysts to cut earnings forecasts further.

"Earnings expectations for 1998 are still a problem that people haven't dealt with," said Tony Spare, chief investment officer at Spare, Kaplan, Bischel in San Francisco. "But at least now they're talking a little bit about the first quarter."

Wall Street analysts expect the companies in the S&P 500 to post earnings growth of 13.6 per cent in the current quarter, down from an estimate of 16.7 per cent just two weeks ago.

For the week, the Dow Jones Industrial Average dropped 0.7 per cent and the Standard & Poor's Index fell 0.6 per cent. The Nasdaq rose 0.8 per cent with the help of telecommunications equipment makers Andrew Corp and Qualcomm Inc, which reported an unexpected fourfold rise in profit.

The prospect of lower earnings because of the slowdown in South-east Asia helped send a number of stocks lower last week. Oilfield and drilling companies were the worst-performing groups, though, as the mild winter and slumping Asian demand pushed prices to a four-year low.

Merrill Lynch fell 9.4 per cent on Tuesday after reporting lower-than- expected fourth-quarter earnings. The firm said 1998 will be a tough year because of "recent events in Asia and unsettled conditions in US markets."

Copyright: IOS & Bloomberg

Start your day with The Independent, sign up for daily news emails
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
footballShirt then goes on sale on Gumtree
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvName confirmed for third series
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine