Stocks opened lower Tuesday as results from mortgage giant Fannie Mae (FNM) and Swiss mega-bank UBS (UBS) both showed strain from the past year's financial crisis.
Fannie Mae, the Federal National Mortgage Association, posted a loss of $2.57 per share, vs. earnings of 85 cents a year ago. Net interest income rose 41% and revenue was up 38%, but the firm was hurt by the drop in home prices; mortgage delinquencies, defaults and foreclosures; lower interest rates; and wider credit spreads on securities. It reportedly plans to cut its dividend in the third quarter and raise $6 billion in new capital.
UBS plans to cut 5,500 jobs after reporting $17.3 billion in first-quarter losses at its investment bank. The firm says it expects conditions to remain difficult in the financial industry.
Early on Tuesday, the Dow Jones industrial average was down 60.09 points, or 0.46%, to 12,909.45. The broader S&P 500 index lost 4.52 points, or 0.32%, to 1,402.97. The tech-heavy Nasdaq composite index fell 8.64 points, or 0.35%, to 2,455.48.
After hitting records on Monday, the price of oil was rising again on Tuesday. On the NYMEX, crude oil for June delivery was up 25 cents to $120.22 per barrel.
On Tuesday, the International Council of Shopping Centers said chain store sales fell 0.2% last week, after rising 0.9% the previous week.
Among other stocks in the news Tuesday, Wachovia (WB) said it is now reporting a first-quarter net loss available to common stockholders of $708 million, or 36 cents per share. On Apr. 14, it reported a loss of $393 million, or 20 cents per share. Wachovia increased the loss after reviewing information regarding $360 million of stable value agreements provided by a third-party guarantor, according to a Reuters report.
R.R. Donnelley & Sons Co. (RRD) posted earnings of 85 cents per share, vs. 63 cents a year ago, as sales rose 7.3%. The firm increased the low end of its earning predictions for 2008.
Legg Mason (LM) posted a $1.81-per-share loss, vs. earnings of $1.19 a year ago. Revenue dropped 6.4%.
NYSE Euronext (NYX) reported earnings of 87 cents per share, vs. 43 cents a year ago, as revenue rose 84%.
Scotts Miracle-Gro Co. (SMG) posted earnings of $1.19 per share, vs. $1.40 a year ago, as sales fell 3.6%. The firm cited a slow start to the lawn and garden season because of cold and wet weather in March.
Weight Watchers International (WTW) posted lower-than-expected earnings of 72 cents per share, vs. 63 cents a year ago, as sales rose 9.4%.
Major European indexes were falling Tuesday. In London, the FTSE 100 index was down 0.67% to 6,174.10. Paris' CAC 40 index fell 0.77% to 5,024.38, and Germany's DAX index dropped 0.8% to 6,995.57.
In Asia, Japan's Nikkei 225 was up 2.05% to 14,049.26, while Hong Kong's Hang Seng index fell 0.22% to 26,183.95.
Treasury market
Treasuries were barely moving Tuesday. The two-year notes were flat at 99-15/32 for a yield of 2.418%; the 10-year note rose 01/32 to 97-03/32 for a yield of 3.865%; and the 30-year bond was down 07/32 to 97-16/32 for a yield of 4.595%.