Stock futures down, eyes on Merrill
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Wed, 24 Oct 2007 09:52:01 GMT |
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By Peter StarckFRANKFURT (Reuters) - Futures on benchmark U.S. equity indexes were in the red before Wall Street's opening on Wednesday, with eyes on Merrill Lynch after media reports of bigger write-downs than the brokerage has flagged.In addition to Merrill Lynch, whose quarterly report is expected before the start of U.S. trading, more than 50 S&P 500 companies are scheduled to report earnings."The third quarter of 2007 is shaping up as the first negative earnings quarter for the S&P 500 since the first quarter of 2002," Morgan Stanley said in a research note.On the macro economic front, the focus will be on housing -- a central element of the growth slowdown in the world's largest economy and the root of the subprime crisis, whose ripple effects into the broader credit markets prompted the Federal Reserve to cut key interest rates on September 18.Weekly mortgage market data are due at 1100 GMT followed at 1400 GMT by existing home sales for September.At 0930 GMT, the Dow Jones future was 0.5 percent lower, the S&P 500 future was down 0.6 percent and the Nasdaq future fell 0.7 percent.The indicative Dow Jones index <.DJII>, which tracks how the Dow stocks are traded in Frankfurt, was 0.3 percent lower.The New York Times and the Wall Street Journal reported that Merrill Lynch's third-quarter bond-related writedowns could be some $2 billion or more over its earlier forecast of $5 billion."Investors are quite cautious because new truths about the impact of the subprime crisis could be looming," Germany's Postbank said, referring to Merrill Lynch's upcoming report.But Merrill Lynch shares traded 0.2 percent higher in Frankfurt at 0930 GMT.BELLWETHER RESULTSOther bellwether companies due to report on Wednesday include Amgen , the world's largest biotech company, the number one U.S. brewer Anheuser-Busch , aircraft maker Boeing , oil company ConocoPhillips and defense contractor Northrop Grumman .Among stocks on the move after Tuesday's closing bell Amazon.com fell about 5 percent in heavy trading and Juniper Networks fell 3.7 percent, both after reporting quarterly results.The National Association of Realtors's U.S. existing home sales for September are expected to come in at 5.25 million annualized units, down from 5.5 million units in August, according to a Reuters poll of economists."Without a credit crunch U.S. home sales would have been in recovery by now ... (but) on the contrary, home sales are about to reach new multi-year lows," ING said."Home sales have plunged 25 percent from the peak but no one knows how much further to go," the Dutch bank said in a note."There is a credit crunch to deal with and negative house price growth is here to stay for probably much longer," it said.On Tuesday, the broader U.S. stock market gained for a second session, though not as briskly as the technology sector. The Dow Jones industrial average <.DJI> rose 0.8 percent, the S&P 500 <.SPX> was up 0.9 percent and the Nasdaq Composite added 1.7 percent.Advancing stocks outnumbered declining stocks by about 2 to 1 on the New York Stock Exchange and by 3 to 2 on Nasdaq.
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