Before the bell: Futures down as Wachovia reports loss

14 04 2008

Before the bell: Futures down as Wachovia reports loss

Posted by: in Latest News

Filed under: Before the bell, Earnings reports, Deals, General Electric (GE), Blockbuster Inc ‘A’ (BBI), Circuit City Stores (CC), Wachovia Corp (WB), Delta Air Lines (DAL)

Stock futures were down this morning as Wachovia Corp (NYSE: WB) posted its first quarterly loss since 2001 and cut its dividend. One of the biggest banks in the country, Wachovia reported a loss of $393 million, or 20 cents a share, compared with earnings of $2.3 billion, or $1.20 a year ago. The Wall Street Journal reported that Wachovia is to receive a capital infusion of about $7 billion.

Stocks tumbled on Friday after disappointing Q1 earnings from General Electric (NYSE: GE) and a 26-year low in U.S. consumer sentiment, among other economic bad news. The Dow Jones Industrial Average fell 256.56 points, or 2.04%, the S&P 500 lost 27.72 points, or 2.04%, and the Nasdaq Composite lost 61.46 points, or 2.6%. The Group of 7, who began meetings on Friday, “downgraded their outlook” for the global economy, saying that it may continue to slow.

In the news today, Blockbuster (NYSE: BBI) made an unsolicited bid of $6 to $8 a share in cash for Circuit City Stores (NYSE: CC). The bid represents a premium of as much as 54% over the struggling electronic retailer’s closing price Friday, and is worth up to $1.35 billion. The Delta and Northwest merger, which would create the world’s largest airline, appears likely to be finalized as soon as Tuesday, according to the Wall Street Journal.

In Europe and Asia, stocks tumbled today on GE’s earnings surprise and pessimistic G-7 pronouncements. Royal Philips Electronics, Europe’s largest consumer electronics maker, also reported a bigger decline in Q1 profit than analysts had expected.

Economic figures due out this day include retail sales for March, which will be released at 8:30 a.m. EST. Sales are expected to rise slightly by 0.1%. Excluding autos, they’re estimated to rise by 0.2%. According to Bloomberg, any good news in retail sales would be a surprise, and if the news is all bad, “a recession in the first quarter will be certain.” February business inventories data are due at 10:00 a.m. EST.

This is a huge earnings week with quarterly reports due from JPMorgan Chase, Intel Corp., Johnson & Johnson, Merrill Lynch, Citigroup, and Pfizer, among others. These reports will, no doubt, set the tone for the week.