Wall Street to open slightly lower on weak profit outlook
By Chuck Mikolajczak | October 11, 2012 12:35 AM EST
U.S. stocks were set for a slightly lower open on Wednesday as earnings season started with a warning from Alcoa about slower aluminum consumption, underscoring concerns about sluggish worldwide growth.
Other large companies warned of slowed growth, including Dow component Chevron and engine maker Cummins Inc.
Stronger demand from airplane and automobile producers helped Alcoa , the largest U.S. aluminum producer, to report third-quarter results that beat analysts' expectations. Alcoa shares lost 1.6 percent to $8.98 in premarket trade.
Lackluster growth in China, the world's second-largest economy, is expected to rein in corporate earnings in the third quarter and dent profit forecasts as the Asian nation feels the pinch of the debt crisis in the euro zone, a key trading partner.
Earlier in the week, the World Bank cut its growth forecast for East Asia on concerns China's slowdown could last longer than expected.
"You've seen very cautionary earnings results and even forward guidance. Alcoa has good earnings, but their forward guidance is lackluster. It points to a slow China and slow global growth," said Richard Weeks, managing director at HighTower Advisors in Vienna, Virginia.
"The question is when does sentiment change where (bad) news dampens the market."
Analysts forecast third-quarter earnings of Wall Street's S&P 500 <.SPX> companies would fall 2.3 percent from the year-ago quarter, according to Thomson Reuters data, which would be the first drop in U.S. quarterly earnings in three years.
According to data through Tuesday, 94 companies in the benchmark S&P index have issued negative outlooks, compared with 22 positive pre-announcements, for a ratio of 4.3, the weakest showing since the third quarter of 2001.
Going against general declines was Yum Brands Inc
S&P 500 futures shed 1 point and were slightly below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 22 points, while Nasdaq 100 futures added 0.25 point.
The S&P 500 has fallen for three consecutive sessions on growing concerns about corporate profits, with the index closing on Thursday near the technical support level of 1,440.
Economic data expected Wednesday include wholesale inventories for August at 10 a.m. and the Federal Reserve's Beige Book of economic conditions at 2 p.m..
U.S. engine maker Cummins Inc
Earnings from warehouse chain Costco Wholesale Corp
Coming on the heels of a 2013 profit forecast that was cut last month, FedEx Corp
True Religion Apparel Inc
(Editing by Kenneth Barry)
Most Popular Slideshows
- Gennady Golovkin Next Fight Options: Canelo Alvarez, Miguel Cotto Or Julio Cesar Chavez Jr.
- NFL MNF: Pittsburgh Steelers 30, Houston Texans 23 [PHOTOS]
- 2014 MLB World Series Game 1: San Francisco Giants 7, Kansas City Royals 1 [PHOTOS]
- 2014 MLB World Series - Game 2: Kansas City Royals 7, San Francisco Giants 2 [PHOTOS]
Join the Conversation
- No Mercy: ISIS, Father Stones to Death Daughter for Alleged Adultery
- iOS 8 Jailbreak Release Date is Doomed as Team Evad3rs Opts Out, Pangu Hits Snag – Report
- Boy Stoned To Death For Alleged Rape, Victim Receives Dowry From Militants
- Google Nexus 6 vs. iPhone 5S: 4 Important Things to Consider Before Switching to Android Lollipop
- Swedish Military Spots ‘Russian Submarine’ Off Stockholm Coast, An Alarming ‘Security Game Changer’
- Canada Raises National Terror Alert Level after Suspected Jihadist Runs Over Soldier
- Russia is Creating Underwater Combat Robots to Protect its Arctic Territories