<U.S. stocks to open lower open after eBay disappoints
Thursday January 20, 9:05 am ET
By Mark Cotton
NEW YORK (CBS.MW) -- U.S. stock futures are indicating a lower open Thursday after eBay's fourth quarter earnings miss and a disappointing outlook raised fresh concern about slowing growth in corporate profits for 2005.
Dow futures were off 29 points, at 10,500, Nasdaq 100 futures fell 11.5 points, to 1,531, while S&P 500 futures dipped 4.10 points, to 1,179.40.
"Obviously eBay is weighing on sentiment," said Peter Cardillo, chief market analyst at S.W. Bach. "But earnings overall have not been that bad. Most companies are showing growth and meeting expectations."
"The market is basically fearful of a hawkish Fed going forward. We also have the upcoming elections in Iraq and there is some fear that oil prices might spike over that $50 level in anticipation of that."
"It's this fear factor which is restraining stocks from responding to good economic and earnings news."
On Wednesday, stocks closed sharply lower, ending a two-session run of gains as investors fretted over a mixed batch of corporate earnings reports.
The Dow Jones Industrial Average (^DJI - News) fell 88.82 points, or 0.8 percent, at 10,539.97.
The Nasdaq Composite Index (NasdaqSC:^IXIC - News) fell 32.45 points, to 2,073.59, while the S&P 500 Index (CBOE:^SPX - News) dropped 11.35 points, at 1,184.63.
After a flurry of upbeat economic reports in the prior session, investors will be hoping Thursday's data will provide further re-assurance the U.S. economy is in good shape.
The index of U.S. leading economic indicators for December is released by the Conference Board at 10 a.m. ET. The index is expected to tick up 0.2 percent, according to economists polled by
Investors will also get a snapshot on the strength of the U.S. manufacturing sector when the Philadelphia Federal Reserve Bank issues its latest reading on factory activity in the Philadelphia region.
The index, which is released at 12 p.m. ET, is expected to slip to 25.3 from 25.4, according to economists polled by
As investors grapple with a fresh round of mixed earnings reports, they can take some comfort from a drop in crude-oil prices after the latest supply data revealed the biggest weekly climb in U.S. crude inventories in nearly three months.
Crude for February delivery was down 75 cents, at $46.80 in electronic trading.
On the currency markets, the dollar advanced against the euro and the yen.
The euro was down 0.5 percent, at $1.2940. Against the Japanese yen, the greenback edged up 0.2 percent, at 102.92.
EBay Inc. shares tumbled in pre-market trading on Instinet after the online auction company's fourth quarter earnings came up a penny short of analyst estimates, due to higher advertising costs and increased investment. The company also cut its first quarter outlook.
The earnings miss prompted broker downgrades from Deutsche Bank, Piper Jaffray and Friedman Billings Ramsey.
However, it was not all bad news for the San Jose, Calif. -based company which reported a 44 percent jump in sales to $935.8 million, slightly topping analysts' expectations of $934 million, as international sales shot up 64 percent. EBay also announced a 2-for-1 stock split.
EBay shares (NasdaqNM:EBAY - News) were last down $14.38, or 14 percent, at $88.67.
Citigroup was a bright spot in the earnings season after the nation's largest financial services group posted a forecast-beating 12 percent rise in fourth quarter earnings.
Growth in its consumer business here and abroad as well as better results at its Smith Barney investment bank underpinned its solid performance.
Citigroup shares were down 0.3 percent in pre-market trading, in line with an expected pullback in the broader market.
Elsewhere in the banking sector, SunTrust Banks (NYSE:STI - News) reported quarterly earnings a penny shy of estimates, and warned of "material weakness" in its internal controls, which could lead to an adverse opinion being issued by its independent auditors. SunTrust shares edged up 2 cents, to $70.73 in trading Wednesday
On a more positive note, Detroit-based financial services group Comerica's fourth quarter results handily beat analyst estimates, as it reined in costs and posted healthy growth in net interest income. Comerica shares (NYSE:CMA - News) traded down 0.9 percent, at $59.05 in trading Wednesday.
Among other earnings reports of note, Ford Motor Co. managed to post fourth quarter results and revenues ahead of analyst estimates even as vehicle unit sales for the quarter dipped. Ford shares (NYSE:F - News) traded down 1.1 percent, at $13.93 in trading Wednesday.
Meanwhile, shares of Delphi Corp are likely to move higher in early trading after the car parts maker posted a narrower-than-expected quarterly loss. Delphi shares (NYSE:DPH - News) traded down 0.4 percent, to $7.94 in trading Wednesday.
For those investors more attracted to transport of the two-wheeled variety, Harley-Davidson Inc (NYSE:HDI - News) posted forecast-topping fourth quarter results.
The motorcycle group said it plans to ship 339,000 Harley-Davidson motorcycles during 2005 and reiterated plans to grow production to 400,000 per year by 2007. Shares fell 20 cents to $59.71 on Wednesday.>
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