Wall St. tech glitch

February 21, 2002 Posted: 1359 GMT

NEW YORK (CNN/Money) -- Wall Street appears to have relapsed into cautious mode early Thursday after a warning from Ciena and a brokerage's earnings forecast cut of Intel could prevent any follow-through action from the previous session's strong rally.

At 8:55 a.m. ET, stock futures pointed to a lower opening for the major markets after being higher earlier in the morning.

Ciena reported a first-quarter loss that was narrower than recently weakened estimates. The company logged a loss of $56.7 million, or 17 cents a share, compared with a profit of 18 cents a share in the year-earlier quarter. Analysts had forecast a loss of 20 cents a share. The company lowered its second-quarter revenue forecast, citing business uncertainty. Ciena shares lost 90 cents to $7.80 in before-hours trading Thursday.

Early Thursday, Banc of America lowered its second and third-quarter earnings estimates for No. 1 chipmaker Intel (INTC: Research, Estimates) , citing uncertainty about computer component sales and increased supply, according to Briefing.com. Intel shares fell 74 cents to $30.70 in before-hours trading.

Lucent Technologies' (LU: Research, Estimates) reiteration of forecasts initiated an impressive U-turn for U.S. stocks Wednesday.

The telecom equipment maker, reaffirmed its sales growth projection for the current quarter and its prediction that it will return to profitability by the end of this year. The company also announced the development of a new laser that will facilitate broadband communications. Lucent shares rose 6 cents to $5.80 in before-hours trading Thursday.

The reiteration was seen by some analysts as a key reason for Wednesday's U.S. market turnaround. "Oddly, it was sparked when Lucent's chairman said they were going to be profitable, believe it or not," Vince Farrell of Victory Capital Management told CNN's Lou Dobbs Moneyline on Wednesday. "And then what happened it seemed that the basic industry stocks started to do somewhat better."

In early 2000, as technology stocks were reaching their peak, Lucent issued a warning about sales and income. Its shares have lost more than 90 percent of their value since then; Lucent closed Wednesday at $5.68, up 39 cents.

The Dow Jones industrial average commences trading at 9,941.17, surging 196 points Wednesday after struggling for direction throughout the early part of the session. The Nasdaq composite index begins at 1,775.57 after a gain of 25 points, while the Standard & Poor's 500 is at 1,097.98 following a more than 14-point advance.

Asian stocks closed mostly higher Thursday, with Tokyo's Nikkei index rising 4.7 percent. European markets rose in midday trading.

Treasury prices were lower, with the 10-year note yield rising to 4.89 percent from 4.87 percent late Wednesday. The dollar slipped versus the euro but rose against the yen. Brent oil futures rose 32 cents to $20.18 a barrel in London. Gold edged higher.

In economic news, the Labor Department reported that the number of Americans filing new claims for unemployment benefits rose to 383,000 in the week ended Feb. 16, up from 373,000 the preceding week. Economists surveyed by Briefing.com expected 375,000 new claims last week. 

The December report on the nation's trade deficit showed a narrower-than-expected narrowing to $25.3 billion from a $28.6 billion in November.

Shortly after the start of trading, the Conference Board is slated to issue its January Index of Leading Indicators. The LEI is forecast to have risen 0.6 percent, after a 1.2 percent rise in December.

Around midday, the Federal Reserve Bank of Philadelphia is scheduled to release its widely read regional economic report for February. The bank's general activity index is projected to slip to 10 from 14.7 in January.

RadioShack (RSH: Research, Estimates), the third largest U.S. consumer electronics retailer, reported fourth-quarter earnings of  $126 million, or 67 cents a share. Analysts had forecast a profit of 66 cents a share, according to First Call. RadioShack shares closed up 42 cents to $27.01 Wednesday.

Wireless communications provider Nextel Communications (NXTL: Research, Estimates) reported a larger fourth-quarter lossas costs associated with its expansion soared. The company said its domestic net loss grew to $188 million from $96 million a year earlier. Revenue rose to $1.88 billion from $1.53 billion. Nextel said it would not report earnings per share until it files its annual report with the Securities and Exchange Commission because of large charges expected to be reported by its troubled NII Holdings Inc. unit. Nextel shares rose 7 cents to $4.45 in before-hours trading Thursday.

Aetna (AET: Research, Estimates) , the nation's No. 1 health insurer, reported a wider-than-expected fourth-quarter loss. The company's shares lost 53 cents to $31.88 Wednesday.

Retailer J.C. Penney (JCP: Research, Estimates) reported fourth-quarter results that topped expectations, but the company warned it would miss forecasts for its current fiscal year. The company's shares rose $1.88 to $23.59 Wednesday.

After the close, companies posting results are expected to include retailer Nordstrom (JWN: Research, Estimates)  and Linux software distributor VA Linux Systems (LNUX: Research, Estimates) .