MW: U.S. stock futures point to fifth loss in a row
U.S. stock futures pointed to a fifth straight loss on Tuesday, with grim earnings news from Alcoa and Federal Reserve Chairman Ben Bernanke's warning that the timing of an economic recovery was uncertain denting sentiment.
S&P 500 futures fell 6.5 points to 861.60 and Nasdaq 100 futures dropped 9.5 points to 1,196.50. Dow industrial futures slipped 61 points.
The timing and strength of the global economic recovery "are highly uncertain," Federal Reserve Chairman Ben Bernanke said Tuesday. Coordinated government policy responses will be critical to turning the economy around, he said in prepared remarks.
The next step in the battle against the financial market crisis is to get toxic assets off the balance sheets of financial institutions, Bernanke added, which may require government outlays above the $700 billion fund set up by Congress.
Also out on Tuesday will be a report on the trade deficit in November.
Japanese stocks were rattled on Tuesday, with the Nikkei 225 shedding 4.8% after a three-day hiatus, led lower by electronics makers like Sony. See related story.
The FTSE 100 dropped 2% in mid-afternoon trade, led lower by metals producers and banks. Data showing Chinese exports falling 2.8% in December hurt the mining sector.
"I'm still underweight banks and I think that we haven't yet seen the second wave of bad debt problems from normal loans to people losing their jobs. I think that banks could continue to struggle for some time," said Andrew Lynch, portfolio manager at Schroder Investment Management in London.
The dollar edged slightly lower vs. the Japanese yen, while oil futures slipped below $37 a barrel.
Three-month dollar LIBOR dropped to 1.09% from 1.16%, the lowest rate since June 2003.
Shares of Alcoa slipped 1.2% as the aluminum producer lost $1.2 billion in the fourth quarter. The stock had dropped sharply on Monday in anticipation of a weak result.
Lexmark International shares slipped 6.5% after a warning on profits from the printer maker.
Benihana slumped 30% in preopen trade after reporting an 11% drop in same-restaurant sales.
Amid the grim earnings news, Merrill Lynch said its was shifting its stance in the consumer products sector, seeking more stable, less levered firm in a note that saw upgrades of Alberto-Culver and Kimberly-Clark and downgrades to Energizer and Newell Rubbermaid .
On the plus side, Liz Claiborne shares jumped 18% after reducing its credit facility to $600 million from $750 million.
Elan rallied in Dublin trade after the Irish drugmaker put itself on the block, hiring Citigroup as an adviser.
Earnings worries, notably in the financials sector, pushed U.S. stocks to lows for the year so far on Monday. The Dow Jones Industrial Average dropped 125 points, the S&P 500 lost 20 points and the Nasdaq Composite dropped 32 points.
