Economy fears drag down US stocks

MARKET OUTLOOK

- US: US markets ended lower last week as concerns increased about an economic slowdown in the US. Shares from diversified financials, tech. hardware, real estate and banks were under pressure, while house and personal production, energy and utilities managed to outperform the market. Technically, US indexes broke their trend line support. They now evolve below their 20D and 50D moving averages. A continuation of the decline is expected this week.

- EUROPE: European markets dropped last week as investors expected a continued slump in the banking sector. Stocks from basic resources, industrial goods and services, oil and gas and utilities were among the best performers, while travel and leisure, banks, retail and insurance lost ground. From a technical point of view, major European indexes broke below their ascending channel. A further downside move is likely.

COMPANY PREVIEW

Wal-Mart (USD 42.9 ; -2.92% ; WMT ; WMT.N)

On Tuesday, the world's largest retailer Wal-Mart will announce Q3 EPS of $0.67 ($0.61 a year earlier) on sales of $91.7bn ($83.5bn). Last week, the Co reported that it would create 110 positions instead of cutting 1,200 jobs in southern China. Several days before, the Co's Canada unit was expected to begin a 5Y fundraising campaign to support Canada's war heroes and veterans by setting up a World War II educational museums in France.

Applied Materials (USD 18.71 ; -0.85% ; AMAT ; AMAT.O)

On Wednesday, Applied Materials is expected to post Q4 EPS of $0.29 ($0.28 last year) on sales of $2.37bn ($2.5bn). A few days ago, the Co reported that it might become a leader in photovoltaic R and D thanks to the opening of its SunFab Technology Centre. In September, the Co not only planned to buy more machine parts in China, but also wanted to win more contracts.

Suez (EUR 44.28 ; -1.91% ; SZE ; LYOE.PA)

On Thursday, in France, Suez will unveil Q3 earnings. At the end of October, the Co signed an agreement with Municipal Electric Power Company over the cooperation on the development of 'green energy'. Nearly two weeks before, the Co planned to bid for building two nuclear reactors in Romania. Last month, Suez's waste and water unit bought 33% of Aguas de Valencia for E135m to gain market share in Spain.

Starbucks (USD 22.57 ; -11.59% ; SBUX ; SBUX.O)

On the same day, Starbucks Corp may deliver Q4 EPS of $0.21 ($0.17 a year ago) on sales of $2.4bn ($2bn). Last week, the Co started to expand a wireless version of Apple's iTunes to its San Francisco stores. At the beginning of November, the group planned to add over 80 stores in China by the end of the fiscal year. Several days before, Starbucks and PepsiCo announced together that they intended to expand their relationship beyond North America.

Telefonica (EUR 22.39 ; -3.33% ; TEF ; TEF.MC)

Finally, Telefonica will post Q3 net income of E3bn (2.6bn a year earlier) on sales of E14.2bn (E13.5bn) on Friday. At the end of last month, the Co expected to double its stake in China Netcom Group to 10% before 2008. In the same period, Telefonica planned to complete the purchase of an indirect stake in Telecom Italia. Separately, the Co anticipated 16%-20% growth of operating income and 5%-8% revenues increase for 2006-2010.