Major U.S. stocks indexes were indicated to open lower Monday as index futures fell in pre-market trading. The early weakness follows sharp declines in the preceding session. The market, already reeling from General Electric's (GE) weaker than expected earnings report Friday, slipped further when Wachovia (WB) unexpectedly reported a quarterly loss and cut its dividend, while also confirming a $7 billion recapitalization plan.
Also, Deutsche Bank (DB) is aiming to sell up to $20 billion of debt, according to a Wall Street Journal report.
In economic news, U.S. retail sales rose 0.2% in March, while the ex-auto component was up 0.1% -- stronger than expected. February's 0.6% decline was revised up to -0.4%, and the 0.2% decline in the ex-auto figure was revised to a 0.1% drop. Headline sales have slowed to a 0.1% year-over-year pace from 6.8% in February, while ex-auto sales are up 2.1% year-over-year vs. 8.8% February.
Coming later is business inventories, which are seen up 0.4% in March.
Bonds were a bit higher in a flight to safety, while the dollar index moved lower following the weekend meeting of the Group of Seven industrialized nations. Precious metals were mostly lower; oil futures were mixed.
Stocks plunged Friday. The Dow Jones industrial average lost 256.56 points, or 2.04%, to 12,325.42. The S&P 500 index fell 27.72 points, or 2.04%, to 1,332.83. The Nasdaq composite index shed 61.46 points, or 2.61%, to 2,290.24.
Wachovia posted a first-quarter loss of 20 cents per share, vs. earnings per share of $1.20 one year earlier, on a 4.5% revenue drop. The company notes higher credit costs and the continued disruption in the capital markets. Wachovia slashed its dividend 41%. In a bid to boost its capital, the company commences concurrent offerings of common stock and preferred stock for an aggregate of $7 billion.
A brokerage downgrade of GE, which reported disappointing earnings Friday, added to equity market woes.
Three days of top-level meetings among the world's senior economic officials ended with a joint international effort to quell the turmoil now gripping global financial markets, according to a Wall Street Journal report.
Oil prices are lower on the back of a stronger U.S. dollar and expectations that slowing growth will curb demand for oil. May Nymex futures were down 22 cents at $109.92 per barrel, after trading in a range of $109.56 and $110.15.
Among stocks in the news Monday, Circuit City Stores (CC) says Blockbuster (BB) has offered to acquire the electronics retailer for at least $6 per share in cash, subject to due diligence.
Scotts Miracle-Gro (SMG) expects adjusted EPS in the second quarter of $1.14-$1.18 due to a late launch to the lawn and garden season. Says its outlook for the full-year is unchanged, as consumer activity over the first two weeks of April has been strong.
Eaton Corp. (ETN) reported first quarter operating EPS of $1.70, vs. $1.62 one year earlier, on a 12% sales rise. The company sees second quarter operating EPS of $1.90-$2.00; and raised its full-year 2008 operating EPS forecast to $7.80-$8.30.
Delta Air Lines (DAL) and Northwest Airlines (NWA) are readying a merger announcement, perhaps as early as Tuesday, according to a Wall Street Journal report.
AirTran Holdings (AAI) updated financial information in response to market volatility, saying, among other things, that it is in full compliance with terms of its credit card agreements, has no holdbacks with any of its major credit card processors; its liquidity position has strengthened from yearend.
European stocks headed lower Monday. In London, the FTSE 100 index fell 0.71% to 5,853.70. In Paris, the CAC 40 index declined 0.72% to 4,763.21. Germany’s DAX index slumped 0.97% to 6,539.67.
Asian markets tumbled Monday after Friday’s Wall Street sell-off. Japan’s Nikkei 225 index dropped 3.05% to 12,917.51. In Hong Kong, the Hang Seng index fell 3.47% to 23,811.20.
Treasury market
Treasuries were heading higher in price Monday in a flight to safety. The 2-year note was up 02/32 to 100-03/32 for a yield of 1.710%, the 10-year note gained 06/32 to 100-14/32 for a yield of 3.452%, and the 30-year bond was up 04/32 to 100-12/32 for a yield of 4.295%.