Futures Fall After Strong Rally; Banks Slip

Stocks looked set to open slightly lower Tuesday and pull back from a strong surge in the previous session.

  • Dow 30: Extra-Hours Quotes
  • Pre-Markets/Futures Data
  • The major indexes closed firmly higher Monday after signs of strength from China’s manufacturing sector and relief after General Motors pulled into its much-anticipated bankruptcy protection.

    The strength of America’s biggest banks was back in focus after Treasury Secretary Timothy Geithner told CNBC that substantial amounts of the Troubled Asset Relief Program (TARP) loans could be repaid soon.

    Meanwhile, JPMorgan Chase, American Express and SunTrust Banks announced plans to raise capital via stock offerings in order to pay back government money. Goldman Sachs also looked to improve its balance sheet by selling its Industrial & Commercial Bank of China stake, sources told Dow Jones.

    The moves will be dilutive to shares of those companies and were weighing on futures in the early going.

    JPMorgan shares fell 1.9 percent in premarket trading while SunTrust and American Express were both off more than 3 percent.

    Morgan Stanley shares also were under pressure, dropping 4.6 percent after it announced plans for a $2.2 billion equity offering.

    Also in banking, US-traded shares of British bank Barclays tumbled more than 12 percent on news that Abu Dhabi sold an 11 percent stake in the company. The sale stemmed from an investment the government made to get Barclays through the financial crisis.

    The fallout from General Motors’ bankruptcy continued as the automaker said it would ask a federal judge to clear the proposed sale of some of its strongest assets within 30 days, putting it close to the quick pace set by Chrysler.

    As GM entered bankruptcy proceedings, Chrysler accelerated toward completion. A judge cleared Chrysler’s asset sale to Fiat and will now be effective at noon on Friday.

    Ford continued to benefit from the fallout, picking up more than 6 percent Monday and another 1.1 percent in premarket trading Tuesday.

    On the economic front, May’s same-store sales are expected to show declines, despite Memorial Day sales, warmer weather and discounting. And April’s pending home sales data is due out at 10 am New York time.

    Dallas Federal Reserve President Richard Fisher will speak on the US and global economy at Lubbock, Texas at 1:20 pm.