Futures Down as Citigroup Misses Estimates

albena
30 Nov, -0001
New York City

Futures were lower in early trading, dropping after the Dow component Citigroup announced its financial results. The No.1 U.S. financial institution reported lower 2Q operating income that disappointed forecasts, while net income advanced vs. last-year

U.S. MARKET AVERAGES

S&P 500 futures lost 2.3 points, Dow Jones industrial average futures shed 24 points, while Nasdaq 100 futures eased 5 points.

Citigroup shares, which ended at $46.42 on the New York Stock Exchange on Friday, were down 2.2% in European trading.

ECONOMIC NEWS

Housing Starts data, which is a key measure of initial construction of residential units both single and multi-family, for the month of June is due to be released Tuesday. Economists expect Housing Starts for the month of June to be 2.03 million. Housing Starts data for May came in at annual unit rate of 2.009 million, 0.2% higher than the 2.005 million units April, while economists had forecasted an annual unit pace of 2.040 million. Housing Starts for multi-unit homes declined 19.3%, while that of single-family homes advanced 4.7%.

On Wednesday, the Energy Information Department is expected to release the weekly Petroleum inventory data for the week ended July 15th.

Federal Reserve Chairman, Alan Greenspan is to deliver the semi-annual Monetary Policy report to House Financial Services Committee in Washington on Thursday.

The customary weekly Jobless Claims data for the week ended July 16th is scheduled to be released on Thursday. Economists expect the claims for unemployment benefits for the first time to decline 9,000 to 327,000 for the week.

Thursday, the Philadelphia Fed index, a read on manufacturing in the northeast region, is expected to have risen to 9.0 from a read of -2.2 in May. Any read over zero signifies expansion in the sector.

INTERNATIONAL MARKET NEWS

Asian markets finished mixed Monday with Japan's Nikkei 225 exchange closed for a national holiday. Australia, Hong Kong and South Korea markets advanced, while China's Shanghai Composite and Singapore's Straits Times Index were among the decliners.

As Typhoon Haitang, packing 172 mph winds neared the coast of Taiwan, the country’s financial markets and businesses were closed.

Australia's All Ordinaries Index edged up 0.1% to 4,259.9 at the close and Hong Kong's Hang Seng Index advanced 0.4% to close at 14,567.

In Asian trading, the dollar was trading at 112.27 to the yen versus 112.22 late Friday in New York.

European markets advanced Monday, as Philips Electronics issued a cautious outlook. Germany's DAX 30 index climbed 0.14% at 4,719, France's CAC 40 index added 0.8% at 4,377, and the U.K.'s FTSE 100 index jumped 0.2% at 5,240.

Philips Electronics ((PHG)) shed 2% after it reported a 59.6% jump in second-quarter net profit on the sale of Navteq ((NVT)) shares, but saw a 3% drop in sales to 7.09 billion euro. Operating income climbed 19% in medical systems and 17% in consumer electronics, while it declined 4.3% in domestic appliances and personal care and 11.1% in lighting and tumbled 88.4% in semiconductors.

ENERGY, METALS AND CURRENCIES MARKETS

Oil prices rose as Hurricane Emily hurt production at Mexican oil platforms in the Gulf of Mexico. The August light crude futures contract for NYMEX added 37 cents to $58.46 a barrel in electronic trading, while the September contract for Brent crude jumped 16 cents to $57.77.

The U.S. dollar was mixed versus other major currencies in European trading .The euro was quoted at $1.2065, up versus $1.2042 late Friday in New York. The greenback bought 112.21 Japanese yen, down vs. 112.22. The British pound was quoted at $1.7473, down versus $1.7513.

Gold in London was trading at $421.60 bid per troy ounce, up versus $420.40 late Friday. In Zurich the bid price was $421.50, up versus $420.10. Gold also rose $1.90 in Hong Kong to end at $421.65.

Silver traded in London at $6.98 bid per troy ounce, down versus $6.99.

EARNINGS NEWS

The most recent quarter ended June is traditionally pointing to the smallest year-over-year growth, but many of the early earnings reports have been positive and there haven't been many earnings warnings lately. Analysts forecast that earnings in the second-quarter advanced 8.1% compared with last year.

Chip giant Intel, Microsoft, IBM, Coca-Cola, McDonald's, Altria and SBC Communications are to report today.

Citigroup Inc. ((C)) reported second-quarter net income of $5.07 billion, or 97 cents a share, up versus $1.14 billion, or 22 cents, a year earlier. The company’s quarterly revenue shed 3% to $20.17 billion versus $20.89 billion. Income from continuing operations totaled $4.73 billion, or 91 cents a share, for the quarter, up versus last year's $916 million, or 17 cents a share. Analysts had expected earnings of $1.02 a share for the latest quarter, on revenue of $21.41 billion. Shares of Citigroup lost 8 cents to close at $46.42 on Friday.

Philips Electronics ((PHG)) on Monday reported a 59.6% increase in second-quarter net profit on the sale of Navteq ((NVT)) shares, but saw a 3% drop in sales to 7.09 billion euro. Philips remains cautious on business outlook.

3M Co. ((MMM)) Monday posted a higher 2Q. Net income grew to $776 million, or $1.00 a share, versus $773 million, or 97 cents a share, in the year-earlier comparable quarter. Excluding a one-time charge related to plans to reinvest $1.7 billion in foreign earnings, 3M earned $1.09 a share.

Student Loan Corp. ((STU)), originator and holder of insured student loans, posted second-quarter net income increase of 16% as revenue gained 14%. Net climbed to $80.9 million or $4.05 a share versus $69.7 million, or $3.48, a year ago. Revenue totaled $163.3 million versus $143.6 million last year. Student Loan is owned 80% by Citigroup. Student Loan shares dropped $2.50, or 1.1%, to $220 on Friday.

Mattel, Inc. ((MAT)), a toymaker, said it swung to a second-quarter loss of $94 million, or 23 cents a share, citing a tax expense of $112.9 million, or 28 cents a share, to repatriate foreign earnings and lower margins. The company posted earnings of $23.5 million, or 6 cents a share last year. Excluding one-time items, the results topped the average forecasts for earnings of 7 cents a share. Revenue for the quarter rose 10% to $886.8 million and included a benefit from favorable exchange rates.

Bank of America ((BAC)) posted a second-quarter profit of $1.06 per share, up versus $0.93 per share last year. The company’s quarterly earnings were reduced by $0.02 per share by merger and restructuring charges. Analysts had expected the company to make $1.01 per share.

Hasbro ((HAS)) posted earnings for 2Q of $0.13 per share, up from $0.06 per share last year and above the $0.08 per share seen by analysts. Quarterly revenues jumped 11% to $572.4 million on strong performance from Star Wars products.

CORPORATE NEWS

Whirlpool, an appliance maker, made a bid worth $17 a share, or more than $1.3 billion, for rival Maytag, topping a $14 a share bid from Ripplewood Holdings.

Apollo Advisors is the possible winner over Bain Capital for the marketing-services division of Cendant Corp.. Both bids are considerably higher than the $2 billion analysts originally expected, according to people familiar with the matter. A final decision has yet to be made, and a bid from Bain could still top that of Apollo. An announcement could come as soon as today.

Tool maker Stanley Works made a bid of $494 million for Facom Tools, the tool business of French financial-holding company Fimalac S.A.