US Stocks Open Lower After Spending Data
U.S. stocks open on a down note after data showing U.S. consumer spending fell in December for the sixth time in seven months while the personal savings rate rose to its highest level since May. The Dow Jones Industrial Average is off more 100 points.
Reported Earlier:
US Stock Futures Point To Broad Losses After Data Report
U.S. stock futures pointed to sharp losses for Wall Street as February trading kicked off Monday, with downbeat economic data and earnings continuing to keep investors on a knife's edge.
Futures pushed further south after the release of data showing the sixth drop in U.S. real consumer spending in 7 months. The personal savings rate rose to 3.6% in December, the highest since May.
S&P 500 futures (SPY) fell 14.60 points to 807.930, while Nasdaq 100 futures (QQQQ) fell 15.2 points to 1164 and Dow industrial futures (DIA) surrendered 108 points to 7847.
On Friday, U.S. markets tumbled to end the month much lower. The Dow fell 148 points, or 1.8%, to finish at 8,000, putting its cumulative losses at 8.8% for the month.
The S&P 500 fell 19 points, or 2.3%, to end at 825, and lost 8.6% in the month, the worst performance on record for the month of January. And the Nasdaq Composite lost 31 points, or 2%, to 1476, leaving the tech-heavy benchmark down 6.4% on the month.
Investor unease over the global economic slowdown and the effect that will have on corporate profits is not expected to dissipate anytime soon, say analysts. Investors are also hoping for more clarity from Congress and the White House on establishing a good bank/bad bank institution that would buy up the delinquent loans and illiquid securities corroding banks' books.
"Investors remain uncertain about the Obama administration's financial rescue plan, the feasibility of a "bad bank" and potential impact of the fiscal stimulus package," said Lena Komileva, head of G7 market economics at London-based inter-dealer broker Tullett Prebon PLC (TLPR.LN).
Tobias Levkovich, a strategist at Citigroup Inc. (C), said investors are waiting for a pickup in lending to buy stocks. But he said lending isn't usually a good leading indicator. "We doubt that there is any one piece of data that will provide the panacea that investors crave," he added.
Of stocks in focus, Ford Motor Co. (F) fell nearly 4% in pre-market trade. Reuters reported that Barclays Capital downgraded the No. 2 U.S. automaker, saying it will need government cash by year end.
Meanwhile, General Motors Corp. (GM) is struggling to avoid a $7 billion tax associated with a U.S. Treasury Department plan to give much of the troubled company's outstanding stock to debt holders, the United Auto Workers union and the federal government, according to a published report in The Wall Street Journal.
Ahead of the bell, toy giant Mattel Inc. (MAT) reported net income fell 46% to $176.4 million, or 49 cents a share, on sales of $1.94 billion from $2.19 billion. A survey of analysts by FactSet Research produced consensus estimates of 71 cents of profit on $2.19 billion of sales.
Pfizer Inc. (PFE) fell over 1% as it said Saturday it discontinued a Phase III clinical trial for an experimental pancreatic-cancer drug because it was not showing an improvement over a standard treatment. But the stock also was reportedly upgraded by Credit Suisse Group (CS).
More economic data is due later on Monday with the January manufacturing survey from the Institute for Supply Management and construction spending both due at 10 a.m. Eastern.
Financial issues were weaker across the globe on Monday.
In Europe, the pan-European Dow Jones Stoxx 600 index was down nearly 2%, with banks under pressure. London shares were also weaker as the biggest snowstorm in 18 years crippled public transportation and shut down airports.
Overnight in Asia, Hong Kong shares were hit especially hard, tumbling 3% and dragged down by financials after downgrades for earnings of major Chinese banks. Bank of China fell 3.9%.
In commodities, crude-oil futures were down 75 cents per barrel, while gold was down $15.60 an ounce. In foreign exchange, the Japanese yen was broadly higher, lifted by increased worries over the depth of the global downturn, analysts said. Safe-haven flows also lifted the dollar versus most counterparts, with the exception of the Japanese currency.
The dollar lately changed hands against the euro around $1.27, and against the yen at 89.06. The pound was sharply weaker against the euro, falling to 89.65 pence.
US HOT STOCKS
Among the companies expected to actively trade in Monday's session are Rockwell Automation Inc. (ROK) and Humana Inc. (HUM).
Rockwell Automation shares fell 12% to $22.99 in premarket trading after reporting a 24% decline in fiscal first-quarter net income as margins and sales dropped amid the stronger dollar. The maker of industrial-automation products also slashed its outlook for the year.
Humana reported a 28% decrease in fourth-quarter net income despite increases in revenue and membership as the managed-care company posted higher prescription drug plan expenses and a write-down on an investment losses. Shares fell 3.8% to $36.50 in premarket trading.
Odyssey Marine Exploration Inc. (OMEX) shares jumped 33% to $5.24 after the company said it has discovered the shipwreck of HMS Victory lost in 1744, according to an SEC filing. Odyssey Marine said research indicates that Balchin's Victory sank with a substantial amount of gold and silver specie aboard. Terms of collaboration between Odyssey and the U.K. Ministry of Defence on the project are currently being negotiated, the SEC filing said.
Allied Irish Banks PLC (AIB) and Bank of Ireland PLC (IRE) rose 19% to $3.27 and 10% to $3.30 in premarket trading, respectively, after a Department of Finance spokesman said Monday that the Irish government's bank recapitalization of the two banks, valued at between EUR7 billion and EUR8 billion collectively, will be announced Tuesday or Wednesday.
Standard & Poor's Ratings Services said Altria Group Inc.'s (MO) decision to suspend its $4 billion share repurchase program would allow the tobacco company to preserve its capital position and strengthen its liquidity. Shares rose 1.4% to $16.77 in late trading.
Standard & Poor's Ratings Services warned it may cut credit ratings on newspaper publisher Gannett Co. (GCI) to junk status, saying "revenue and EBITDA declines may not moderate sufficiently over the intermediate term for Gannett to maintain an investment grade rating." Gannett's rating is BBB-, just one notch above junk. Shares fell 3% to $5.60 in after-hours trading.
Closeout retailer Tuesday Morning Corp. (TUES) said it reached a new agreement with one of its lenders for an additional $30 million, bringing the total amount of the facility to $180 million. Shares were unchanged at $1.18 after hours.
Watch List:
ADC Telecommunications Inc. (ADCT) lowered its fiscal first-quarter outlook as demand declined and said it plans to further reduce its work force and implement a hiring freeze. The provider of broadband infrastructure products, which has struggled with high commodity prices, also projected a "significant" goodwill write-down.
BB&T Corp. (BBT) said that despite its results for the year and capital position, the bank is not giving its executives bonuses for 2008. The general public loathes to hear companies handed out money despite needing billions in taxpayer aid, though BB&T did not say public sentiment played a role in its decision.
Center Bancorp Inc. (CNBC) more than tripled its fourth-quarter net income to $1.7 million, or 13 cents a share, from $532,000, or 4 cents a share, from a year earlier. The New Jersey-based regional bank recorded double-digit growth in loans and kept non-performing assets to a slim 0.46% of loans.
Manpower Inc. (MAN) said it plans to appeal a fine of about EUR42 million, or $53.8 million, imposed by the Competition Council in France that said the staffing company's French operating unit, along with other companies, engaged in anti-competitive conduct between March 2003 and November 2004. |