Rocky Open

A sharp spike in the January Producer Price Index has surprised a market that
was already indicating a significantly lower open Friday. Earnings warnings and
layoff announcements from Nortel, Dell and Hewlett Packard after the bell
Thursday seemed to indicate that the economy was limping toward recession.

The PPI rose 1.1% while the core rate rose 0.7%, which were sharply higher
than the 0.2% and 0.1% that analysts had expected. Energy prices rose 3.8%,
which may have accounted for some of the increase. So is it recession or
inflation, or are we seeing signs of a 1970s-style stagflation?

The Dow futures are down 120 points, and the Nasdaq futures are down 65
points.

The S&Ps look to open down 20.20 while the yield on the 10-year Treasury
has risen to 5.23%.

Friday Movers

Dell Computer
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announced that it would lay off 1700 workers, and
that is the first case of layoffs in the company’s 16-year history. Dell closed
Thursday up 2 1/16 to 25 but is trading back down to 23 in pre-market activity.

Ciena
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was the spark behind Thursday’s rally as the optical giant
rose 12 3/16 to 89 after topping earnings estimates. Ciena is giving some of
those gains back and is currently trading down to 84 in pre-market activity.

High-flier techs are getting hit particularly hard. Juniper
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is
looking at a rough open as it trades down to 82 1/2 in pre-market activity
following a 92 3/16 close on Thursday.

Following its 5% rise on Thursday, Intel
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is giving some back
Friday. Following a 35 13/16 close, Intel is currently trading down to34 5/8 in
pre-market activity.

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