Texas Instruments and FedEx in focus after cutting forecasts
NEW YORK (MarketWatch) - U.S. stock futures erased gains and pointed to a lower start on Tuesday after Texas Instruments Inc. and FedEx Corp. cut their earnings forecasts and a measure of chain-store sales declined last week, further illustrating the weakened economy.
S&P 500 futures shed 5 points to 899.7 and Nasdaq 100 futures fell 9.5 points to 1,202.50. Dow Industrials futures dropped 48 points to stand at 8,827.
Ahead of the opening bell, the International Council of Shopping Centers and Goldman Sachs reported chain-store sales declined 0.8% last week from the prior week, and gained only 0.4% from the year-ago period.
"The tough economic and retail environment, which continued into early December, is likely to dominate the full month's sales performance as well," said Michael Niemira, ICSC's chief economist.
U.S. markets climbed Monday, with the Dow Jones Industrial Average closing at its highest level in a month, as investors cheered President-elect Barack Obama's pledge on infrastructure investment and a likely deal for the auto industry. The Dow industrials rose 298.72 points, the S&P 500 jumped 33.63 points and the Nasdaq 100 gained 62.43 points.
In focus on the economic front Tuesday will be the latest figures on October pending home sales, which are due after the market opens at 10 a.m. U.S. Eastern Time.
The dollar strengthened against most currencies but slipped against the yen. The euro fell 0.9% to $1.2815, while the dollar was down 0.3% against the Japanese currency at 92.62 yen.
Oil prices also remained fairly steady in early futures trade on the New York Mercantile Exchange. Light crude for January delivery fell 11 cents to $43.60 a barrel.
The auto industry is set to remain in focus after Democratic leaders sent the White House a $15 billion bill to rescue the sector.
The proposal, which reportedly could give the government an ownership stake in the industry, requires long-term restructuring plans and other concessions from the Big Three in exchange for a federal lifeline. See full story.
The latest round of profit warnings and job cuts rolled on, with TI and FedEx among the companies cutting their forecasts late Monday.
Texas Instruments shares lost 2.2% in pre-open trading after the chipmaker said it expects to report fourth-quarter earnings of 10 cents to 16 cents a share, compared with a previous forecast of 30 cents to 36 cents a share.
Also in the chip sector, National Semiconductor ) moved to scale back production and said sales in the current quarter would likely be down around 30%.
FedEx cut its earnings view for the year to a range of $3.50 to $4.75 a share. It had been expecting $4.75 to $5.25. Shares in the delivery company fell 9.5% in pre-open trading.
Sony Corp. said Tuesday it plans to cut 8,000, or 5%, of the jobs in its electronics division, as well as close manufacturing sites worldwide in an effort to save around $1.1 billion.
Also Tuesday, AutoZone Inc. on Tuesday reported fiscal first-quarter earnings of $2.23 a share compared with $2.02 a share a year earlier. Analysts had been expecting earnings of $2.20 a share.
In international markets, Japan's Nikkei 225 rose 0.8% and the U.K.'s FTSE 100 index added 1.5%.
