Futures Pare Gains After Housing Report
Futures pared gains Tuesday after housing starts unexpectedly fell to a record low.
Futures had been pointing higher for most of the morning, buoyed by news that banks may break free from the government's grip.
Housing starts tumbled 12.8 percentto an annual rate of 458,000 units in April, after an 8.5-percent drop in March. That was the lowest on record and much lower than the 520,000 pace economists had expected. Building permits, a gauge of future activity, also dropped to a fresh record low.
Goldman Sachs, Morgan Stanley and others have applied to pay back the funds they borrowed under the Troubled Asset Relief Program, various sources said.
But the early repayment of the funds may mean that the taxpayers are not getting the returns they were banking on, the New York Times reported.
And investors were only tepidly embracing the news, as both companies' stock gained less than 1 percent in premarket trading.
Other banks were doing better: Citigroup shares rose 3.5 percent premarket while State Street, which on Monday announced efforts to raise capital, picked up more than 2 percent.
In Europe, the UK government has been talking to various investors who may be interested in buying its stakes in part-nationalized banks Royal Bank of Scotland and Lloyds.
Dow component Home Depot's net profit beat expectations, although its latest quarterly sales fell as consumers remained under pressure. Shares edged lower premarket.
In a sign that all is not rosy in the financial sector, American Express said Monday after the bell that it plans to eliminate 4,000 jobs, or 6 percent of its workforce, as higher customer defaults were brought on by the recession. Traders welcomed the news, though, sending American Express shares up 3 percent premarket.
Elsewhere, American depositary shares of Nokia continued to climb, gaining another 3.4 percent a day after the Finnish handset maker announced it was rolling out three new phones that were capable of accessing the Internet but priced on the lower end of the scale.
In earnings news, Germany's Vodafone , the world's largest mobile carrier by revenues, said it would speed up cost-cutting efforts after a $9.1 billion impairment charge because of problems in Spain and Turkey.
Automakers also will be in focus as General Motors rolls toward bankruptcy and the government prepares to implement strict new fuel standards. GM shares were up more than 4 percent premarket, while Ford was 1.6 percent higher.
TUESDAY: Fed's Stern speaks; Earnings from HP, Analog Devices
WEDNESDAY: Weekly mortgage apps; weekly oil inventories; Fed minutes; Fed's Plosser speaks; Earnings from Target, Toll Brothers and BJ's Wholesale
THURSDAY: Weekly jobless claims; Philly Fed report; leading indicators; Fed's Plosser speaks; Earnings from Gamestop, Hormel, Gap and Aeropostale
FRIDAY: Earnings from Campbell Soup
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