Filed under: Before the bell, Deals, Ford Motor (F), General Motors (GM), Market matters, Economic data, Lehman Br Holdings (LEH), Bear Stearns Cos (BSC)
U.S. stock futures were higher early in the morning, suggesting the first day of the new quarter might begin with gains just as several financial firms announced actions taken that investors interpreted more as a sign the credit crisis has bottomed rather than deepening. Some data on the manufacturing industry is also on tap.
U.S. stocks completed a downbeat first quarter with advances Monday, with the Dow industrials rising 46 points, or 0.38%, the Nasdaq Composite rising 17 points, or 0.79%, and the S&P 500 rising 7 points, or 0.57%. Yesterday Wall Street focused on Treasury Secretary Hank Paulson’s plan to overhaul financial regulation.
The focus today will be on financial firms as UBS (NYSE: UBS) and Lehman Brothers (NYSE: LEH) both announced raising capital. As UBS’s writedowns due to exposure to the U.S. subprime crisis reached a whopping $40 billion over the past nine months, the Swiss bank stated it would post first-quarter losses of $12.1 billion and that it would seek $15.1 billion in new capital. Despite the bank announcing that writedowns in the first quarter amounted to $19 billion, UBS shares are up 6.8% in premarket trading (6:00 a.m.) as investors chose to concentrate on action taken rather than losses.
Meanwhile, Lehman Brothers (NYSE: LEH) saw its shares falling in after hours trading after it also announced it would offer up to 3.45 million sharesof convertible preferred stock to boost cash flow and reduce debt, hoping to raise $3 billion. In this case, it seems that investors are not yet confident the bank’s problems as it is most similar in structure to Bear Stearns (NYSE: BSC), which has recently collapsed. Yet, LEH shares are up some 2% in premarket trading (7:00 a.m.).
And last on the list of financial institutions making the news this morning is Deutsche Bank AG (NYSE: DB), Germany’s largest bank, which said Tuesday that it expects first-quarter losses of $4 billion as it joined the growing list of global banks who got caught up with exposure to the U.S. subprime mess.
Economic data due today includes the Institute for Supply Management’s report on nationwide manufacturing activity in March. The ISM index, which already is below 50 — indicating contraction — is expected to decline further and is due out at 10 a.m. February’s reading on construction spending is due out at the same time.
General Motors (NYSE: GM) and Ford Motor (NYSE: F) as well as other automobile manufacturers will release March sales. Overall sales are expected to decline some 13% compared to last year.
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