Before the bell: Futures lower; AIG, TM, WMT down, COST, DNA could gain
Posted by: in Latest NewsFiled under: Before the bell, Earnings reports, Deals, Yahoo! (YHOO), Apple Inc (AAPL), Wal-Mart (WMT), Toyota Motor Corp. (TM), Market matters, Costco Wholesale (COST), Amer Intl Group (AIG), Genentech Inc (DNA), Economic data, Limited Brands (LTD), Oil, Nissan Motors (NSANY)
U.S. stock futures drifted lower Thursday morning on the heel of another large loss reported by AIG. With reports today that mortgages made in 2007 are going bad at a rapid pace, the blow to the financial system may be even deeper than Wall Street had estimated, and data on June pending home sales could give more information about the current say of the housing market. Also in focus this day will be July same-store sales announced by retailers, which could show a 2.2% gain due to stimulus checks and back-to-school shopping, as well as rate decisions by ECB and BOE. The latter already kept rates the same. Finally, rising oil prices could affect trading as well.
AIG (NYSE: AIG) posted its third straight quarterly loss Wednesday after the close. Analyst believe that this quarter’s $5.56 billion recorded loss due to investments related to mortgages could continue in the next few quarters. AIG’s results didn’t just cause investors to dump the stock, but also caused overall jitters about financials. AIG shares are down over 9% in premarket trading. In Europe, Allianz, Axa, Aegon, three of the biggest insurers, also post lower earnings on asset writedowns.
Toyota Motor Corp. (NYSE: TM) reported a 28% profit fall in the quarter, 39% drop in operating profit. The company said the strong yen and rising costs of materials for the decline in addition to soft conditions in the U.S. all contributed to these results. While it stated it plans to offset the declines by launching new car models and stepping up production of popular models, it’s unclear how successful that would be in light of softening economic conditions worldwide.
Staying with the auto industry, The Wall Street Journal reported that Chrysler and Nissan Motors (NASDAQ: NSANY) are in speaks tabout jointly producing midsize vehicles, where Nissan would produce midsize sedans that Chrysler would sell in the U.S. under its own name.
Wal-Mart Stores Inc. (NYSE: WMT) on Thursday reported a 3% increase in July same-store sales, below Wall Street estimates of 3.4%. Costco Wholesale Corp. (NASDAQ: COST) reported a 10% jump in July same-store sales, beating the 7.8% gain projected by analysts. Limited Brands Inc. (NYSE: LTD), the owner of the Victoria’s Secret lingerie chain, reported a 5% decline. WMT shares in particular are being punished, down over 3% in early indications as investors were hoping Wal-Mart could provide some retail defense during the recession and were disappointed.
As agreed, Yahoo! Inc. (NASDAQ: YHOO) appointed activist shareholder Carl Icahn to its board of directors. Following the fiasco of last week’s re-election vote and Icahn’s no show, even he could find himself with low approval ratings.
According to IndiaTimes, Bharti Airtel and Vodafone have announced that they will launch the Apple Inc. (NASDAQ: AAPL) iPhone on August 22 in India.
Bloomberg reports that Roche Holding AG might have to boost its bid for Genentech Inc. (NYSE: DNA) by almost 50% once test results show the cancer drug Avastin, sold by both companies, works against 30 different malignancies, including early-stage colon cancer, the second-leading cause of U.S. cancer death. An analyst at Rodman & Renshaw said that may attract a higher bid and push Genentech’s share price “well north of $100 — maybe $120 or $130.”
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