RTRS: US STOCKS-Futures lower on bank, global flu jitters
Wall Street was set for a drop of more than 1 percent at the open on Tuesday as a report that Bank of America Corp and Citigroup Inc may need more capital revived fears about the stability of the struggling financial sector.
Worries over the economic impact of the threat of a flu pandemic also weighed as New Zealand and Israel confirmed cases of swine flu, making them the latest countries hit by a new strain that has killed up to 149 people in Mexico. (For details, see [ID:nN27476506]).
U.S. regulators have told Bank of America (BAC.N) and Citigroup (C.N) they may need to raise more capital following stress testing of the two banks, the Wall Street Journal reported. [ID:nBNG118035]
The shortfall amounts to billions of dollars at BofA, the paper said, citing people familiar with the bank, adding it is likely the U.S. Federal Reserve will have determined other banks might also need more capital.
Shares of Bank of America were down 9.8 percent at $8.05 before the opening bell, and Citigroup lost 6.5 percent to $2.87.
"Basically the market here is in a minor corrective move, and some of the headlines that are being reported are causing this little pullback after a substantial run-up," said Peter Cardillo, chief market economist at Avalon Partners in New York.
In the latest batch of corporate results, Pfizer Inc (PFE.N) reported better-than-expected first-quarter profits amid cost cutting and reaffirmed its full-year revenue outlook. Shares of the drugmaker gained 1.9 percent to $13.75 in premarket trade. [ID:nN27318686].
S&P 500 futures SPc1 fell 14.00 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 113 points, and Nasdaq 100 NDc1 futures were down 18.25 points.
On the data front, investors are awaiting a reading from the S&P/Case-Shiller Home Price Index for February to get a look at the state of the housing market, as well as a report on consumer confidence for April.
Data on retail sales is also expected, while the Federal Open Market Committee begins a two-day meeting on interest rate policy with an announcement expected on Wednesday.
