RTRS: Stocks set to slip at open on worrying outlooks
By Ellis Mnyandu
NEW YORK (Reuters) - Stocks were set to slip at the open on Tuesday as investors paused a day after stocks soared to their highest level in a month to gauge if the market's latest recovery bid will be sustainable.
Worrisome outlooks from companies including FedEx Corp (FDX.N: Quote, Profile, Research, Stock Buzz) fueled caution. In addition, Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz)(SNE.N: Quote, Profile, Research, Stock Buzz), the maker of PlayStation gaming consoles, will cut 16,000 jobs as fallout from the financial crisis hurts demand.
Even though the stock market has increasingly shown signs of shrugging off even the bleakest of news since hitting the bear market low of November 21, analysts said the recent run-up still warranted some caution, and a bout of profit-taking was likely.
"There's hesitation that indeed the worst is over," said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey. "Only time will tell. Caution is still warranted."
S&P 500 futures were 5 points lower 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 shed 48 points, and Nasdaq 100 futures dipped 2.25 points.
After the bell on Monday, package shipper FedEx said it expects to report a better-than-expected second-quarter profit, but slashed its fiscal 2009 outlook as a weakening U.S. economy offset lower fuel prices.
FedEx shares slid 10.3 percent to $66.80 before the bell.
On the technology front, Sony unveiled plans to slash thousands of jobs to save $1.1 billion a year, while disappointing forecasts from other bellwethers including Texas Instruments (TXN.N: Quote, Profile, Research, Stock Buzz) added to the gloom about spending this holiday season.
Broadcom (BRCM.O: Quote, Profile, Research, Stock Buzz) and Altera Corp (ALTR.O: Quote, Profile, Research, Stock Buzz) also warned on Monday of weaker-than-expected demand.
In economic news, reports showed Japan sank further into recession in the third quarter and British industrial output fell at its sharpest pace in nearly six years in October.
The fate of the U.S. auto industry and millions of jobs remain on the line as major players work out details of a plan to extend emergency loans to the the three U.S. automakers General Motors (GM.N: Quote, Profile, Research, Stock Buzz) , Ford (F.N: Quote, Profile, Research, Stock Buzz) and Chrysler.
Investors will get a glimpse of the housing market when a report on October pending home is due at 10 a.m. EST.
U.S. stocks rallied to their highest level in a month on Monday on optimism President-elect Barack Obama's proposed infrastructure spending could limit the depth of the year-old recession and on hopes for a government bailout of the three U.S. automakers.
Year-to-date the benchmark S&P 500 is down 38 percent, but since the Nov 21 low, the index has risen 20 percent.
