Posted February 2, 2009

Futures point to lower open on earnings woes

* Worry over earnings season dampens sentiment
* Mattel results miss expectations
* S&P 500 futures off 11.20 points, Dow futures off 96 points, Nasdaq 100 futures off 17.25 points
* For up-to-the-minute market news, click [STXNEWS/US]

By Leah Schnurr

NEW YORK (Reuters) U.S. stock index futures pointed to a lower open on Monday as investors fretted about a disappointing earnings season after Wall Street racked up its worst January ever.

U.S. President Barack Obama is meeting with Democratic Congressional leaders in an effort to have his nearly $900 billion stimulus plan pass through Congress by mid-February.

The plan is facing opposition from top Republicans, however, who say their party is unlikely to back the bill without changes.

"It appears ... there's not a lot of optimism to be found after having the worst January on record," said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey, adding: "... There's a fear that things are going to get worse before they get better."

Among the morning's batch of quarterly results, top toy company Mattel Inc (MAT.N) reported a disappointing profit stung by a weak holiday season and a stronger dollar.

S&P 500 futures SPc1 fell 11.20 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 lost 96 points, and Nasdaq 100 NDc1 futures were down 17.25 points.

Stocks fell on Friday after data showed the economy shrank in the fourth quarter at the fastest pace in nearly 27 years.

Both the Dow and the benchmark S&P 500 .SPX suffered their worst January ever, with the Dow down 8.8 percent and the S&P down 8.6 percent. The slide further hurt already depressed sentiment as January traditionally sets the tone for stocks' performance for the rest of the year.

Questions over the fate of the ailing banking sector remained after a report last week that U.S. policy-makers have yet to reach a consensus on how a government-run "bad bank" to mop up toxic assets would work and the idea may not move forward. Shares of Bank of America (BAC.N) fell 2.1 percent to $6.44 in premarket trading.

Financials could also come under pressure after Moody's cut its long-term ratings on Britain's Barclays Bank (BARC.L) (BCS.N) on expectations of "significant" further losses.

Energy shares could be hurt as the price of oil CLc1 fell below $41 a barrel on falling demand due to the deteriorating U.S. economy. Oil has seen a steep decline since hitting a record over $147 in July last year.
(Editing by James Dalgleish)

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