Weak Outlooks, Lending Fears Hit Futures
Stock indexes indicated a lower opening as tepid earnings outlooks and worries over bank lending spread worry on Wall Street.
But worries over the health of the economy seemed to offset enthusiasm after news of a possible second stimulus package, and futures were still pointing lower.
Chemical maker DuPont reported a profit of 56 cents a share in the third quarter, excluding items, 5 cents ahead of the consensus estimate of 51 cents a share. But shares slipped 5 percent in premarket trading as the Dow component lowered its full-year forecast because of weaker demand expected both in the US and globally.
Drug giant Pfizer reported higher earnings for the third quarter but revenue came in just below what Wall Street was expecting. The company earned 62 cents a share, versus the consensus forecast of 60 cents a share. Revenue, however, was a bit light, coming in at $11.97 billion, vs. the $12.01 analysts were expecting, according to Thomson Reuters. Shares gained 2.5 percent in premarket trading.
Caterpillarsaid its quarterly earnings fell 6.4 percent as demand in emerging markets for the construction and mining equipment manufacturer partly offset weakness in the United States, Europe and Asia.
The Dow component reported a third-quarter net profit of $868 million, or $1.39 a share, down from $927 million, or $1.40 a share, a year before, slightly below estimates of $1.41 a share. But the company's somewhat buoyant outlook on the world economy impressed investors and sent shares up 1.5 percent premarket.
Federal Reserve Chairman Ben Bernanke told the House Budget Committee Monday that the economy may need a second government package to help it stabilize, suggesting that prior efforts to do so have not met expectations.
Bernanke suggested that Congress design the stimulus package so that it will be timely, well targeted and would limit the longer-term affects on the government's budget deficit, which hit a record high in the recently ended budget year.
Lending rates fell again, with the overnight London Interbank Offer Rate, or Libor, dropping to 1.28 percent and the three-month Libor down to 3.83 percent. But there was concern among analysts about whether the lower rates would encourage banks to lend amid continued worries about counterparty risk.
"It's a borrowing, it's not a security," Kevin Ferry, of Cronus Futures Management, said on CNBC of the drop in Libor. "So even though the price it were to come down it doesn't necessarily start to transact, and that's the key."
In other earnings news, BlackRock's profit fell 15 percent in the third quarter to $1.62 per share from a year ago and was below market expectations of $1.96 per share.
Bank Fifth Third badly missed market forecasts, reporting a loss per share of 14 cents compared with a profit of 18 cents per share expected by analysts polled by ThomsonReuters.
The bank's net loss was $56 million and it was mainly driven by higher credit costs and market valuation adjustments, Fifth Third Bancorp said in a statement.
US Bancorp's profit fell more than market expectations and the company said Tuesday that its performance may be further affected by market turbulence.
Earnings per share at U.S. Bancorp were 32 cents in the quarter ended in September, compared with estimates of 42 cents a share and from 62 cents a share in the same period a year ago.
Schering-Plough beat expectations, earning $551 million, or 34 cents a share, for the third quarter. Excluding certain items the company earned 39 cents a share. On average, analysts predicted a profit of 31 cents a share.
Texas Instrumentsreported a drop in quarterly profit, missing forecasts by a penny a share after the bell Monday. The semiconductor maker also issued a forecast for the fourth quarter that was lower than analysts' projections.
The company reported a profit of 43 cents a share in the third quarter on sales of $3.39 billion, against earnings of 52 cents a share on sales of $3.663 billion last year.
Looking ahead, Texas Instruments says it expects sales to decline "substantially" in the current quarter. Shares fell 7 percent premarket..
American Express reported a profit that fell from last year as it set aside more money to cover credit losses, but the shares rose in late trading as earnings exceeded analysts' estimates. Shares gained 4.5 percent in premarket trading Tuesday.
A string of companies will report earnings before the bell. Dow component 3M is expected to post quarterly earnings of $1.38 a share from $1.29 a year ago, according to ThomsonReuters estimates.
Other companies reporting earnings include and UAL.
Asian stocks ended mixed, while European shares were in the green but off the session's highs.