RTRS: US STOCKS-Futures point to lower open on earnings anxiety
U.S. stock index futures pointed to a lower open on Thursday after a grim outlook from network equipment maker Cisco Systems fueled worries over technology spending, ahead of new initial jobless claims data.
The weekly report on the labor market comes a day before Friday's key January U.S. nonfarm payrolls report and investors are bracing for a bleak employment picture as massive job cuts have been the hallmark of this quarterly earning season.
Cisco Systems Inc (CSCO.O), which makes the Internet infrastructure, could weigh on the Nasdaq after it forecast a slide of as much as 20 percent in its current quarter revenue. For details see [ID:nN03526527]. Shares of the tech bellwether slid 4.2 percent to $15.17 before the opening bell.
"We know earnings have been terrible, we know they're under a tremendous amount of pressure," said Barry Ritholtz, chief market strategist at Fusion IQ in New York.
"There's really just so much you can do in this current environment."
S&P 500 futures SPc1 fell 5.80 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 were down 40 points, and Nasdaq 100 NDc1 futures lost 16.50 points.
Stocks fell on Wednesday as a gloomy profit forecast from Kraft Foods (KFT.N) fueled worries of weakening consumer spending while investors feared that government efforts to rescue banks could wipe out their shareholders.
Unease about the deteriorating earnings picture and uncertainty about the banking sector are major hurdles in the market's attempt to recover from an 11-year low hit on Nov. 21. The S&P 500 is up 4 percent since then, but is down about 8 percent since the start of 2009.
Shares of State Street (STT.N) fell nearly 6 percent to $22.75 after the financial services company slashed its dividend and forecast its 2009 operating earnings per share could fall as much as 16 percent. Shares of rival Bank of New York Mellon (BK.N) also fell nearly 1.5 percent.
Overseas, Deutsche Bank (DBKGn.DE) forecast a gloomy future as debt trading collapsed, while it posted a hefty quarterly loss amid writedowns and shrinking revenues. [ID:nL5171962].
The news could set a negative tone for the financial sector, while investors fret about what shape a government plan to relieve banks of money-losing assets could ultimately take. The Obama administration is due to make an announcement next week.
