CPI Figures Pressure Stock Futures

Elena
21 Feb, 2007
New York City

U.S. stock futures moved lower on Wednesday, hurt by inflation concerns after the Labor Department said that its consumer price index gained 0.3% in January, led by large increases in food, medical care and tobacco prices. Core inflation increased 0.3%, reaching its highest level since June. Among companies in focus, Hewlett-Packard slipped 1.1% in the pre-open after it reported a 26% rise in Q1 profit to $1.55 billion, or 55 cents a share.

[R]9:00 AM Market futures declined amid higher CPI figures.[/R]
U.S. stock futures moved lower on Wednesday, hurt by inflation concerns after the Labor Department said that its consumer price index gained 0.3% in January, led by large increases in food, medical care and tobacco prices. Core inflation increased 0.3%, reaching its highest level since June. Investors worry that inflation wouldn't ease gradually as the Federal Reserve Chairman Ben Bernanke predicted last week.

Among companies in focus, Hewlett-Packard Co. ((HPQ)) shares slipped 1.1% in the pre-open after it reported a 26% rise in Q1 profit to $1.55 billion, or 55 cents a share. The company said it expects to earn 63 cents to 64 cents a share in Q2 excluding one-time items. The stock fell on signs that operating margin momentum of the last few quarters is slowing. Motorola ((MOT)) lost 1% in pre-market trading after Lehman Bros. cut its rating on the mobile phone maker to equal-weight from overweight on concerns over a slow recovery. NovaStar Financial Inc. ((NFI)) dropped 33% in pre-open trade after reporting Q4 net loss of $14.4 million, or 39 cents a share. The company also said it is considering whether to change its Real Estate Investment Trust status. Medtronic Inc. ((MDT)) fell 5.6% after its Q3 net income and revenue missed analyst estimates. S&P 500 futures dropped 3.6 points at 1,458.30 and Nasdaq 100 futures dropped 6 points at 1,832.75. Dow industrial futures dropped 26 points.


[R]8:00 AM Arcelor-Mittal posted a 3.5% profit drop in 2006.[/R]
The world''s largest steelmaker Arcelor-Mittal reported a 3.5% profit decline in 2006, citing a higher tax rate. However, the company said it will distribute $2.4 billion to shareholders by means of dividend and share buybacks. The steelmaker also said it expects its Q1 performance to be in line with Q4 levels. However, management restated its belief that 2007 is likely to show better results than 2006.

Full-year pro-forma profit earned by the company dropped to $7.97 billion from $8.26 billion. Arcelor-Mittal contributed the net income decrease to a higher tax levy of $1.7 billion paid in 2006 compared to $1.4 billion in 2005. The group''s EBITDA earnings rose 2.1% to $15.27 billion in 2006, falling below the company''s own target range of $15.2 billion to $15.4 billion and missing analyst expectations for EBITDA of $15.32 billion.

In the fourth quarter, Arcelor-Mittal earned $2.37 billion, or $1.71 a share, up from $2.18 billion, or $1.57 a share in Q3, boosted by sales rise of 5% to $23.3 billion. The steelmaker generated $4.3 billion in cash in the quarter and cut debt by $2.3 billion. Arcelor-Mittal''s shares rose 0.6% in early afternoon trading in Paris.