Futures Fall on Bleak News From Alcoa, AMD
U.S. stock index futures were lower on Tuesday after Alcoa opened the earnings season with a fall in profit and AMD said it would slash 10 percent of its workforce.
After the bell on Monday, Alcoa reported earnings that came up short of analysts' consensus estimates because of higher costs and a weaker dollar, but its sales beat forecasts.
Analysts' expectations for earnings have worsened. Profits for the Standard & Poor's 500 companies are now expected to be down 12.6 percent from a year ago, according to Thomson Financial. That compares with a 9.9 percent drop expected just last week and a 1.6 percent decline forecast a month ago.
"Technology is losing a little steam here," Rick Meckler, president of LibertyView Capital Management in Jersey City, N.J., told Reuters. "Companies from which the public is looking for decent earnings numbers, like technology, I think, are disappointing with the numbers that are coming out."
Alcoa shares were off 1.7 percent in premarket trading as futures for the major indexes indicated a negative start, though they were off their morning lows by 8 am.
In banking news, Merrill Lynch, which so far has written down $24 billion in investment related to the U.S. mortgage market, does not plan to raise further capital as it has already raised more than it has lost, Chief Executive John Thain said on Tuesday. Merrill shares edged upward premarket.
Bear Stearns front-office employees, including bankers and traders, are expected to find out their employment status on or near April 15, CNBC has learned, while their back-office colleagues will be informed about a week later.
The outlook for Advanced Micro Devices employees is also bleak, as the company said Monday it will cut 10 percent of its work force and gave a first-quarter revenue estimate below Wall Street expectations.
In tech, Dell shares slipped premarket, even though CEO Alan Dell said he is optimistic about the company's chances to grow sales and profits this year.
In economic news, pending home sales numbers for February are due at 10 am. Analysts expect the number to fall by 1 percent.
Before the bell, the National Federation of Independent Business said its index of small business optimism fell to the lowest in its 22-year history. The index slipped 3.3 points in March to 89.6 as employers said they would be creating fewer jobs and cutting back on expansion, giving further rise to the belief that a recession either is imminent or has already arrived.