Pre-Market Report: Stocks Expected Lower; Cautious Trading Ahead of Earnings

 |  Includes: AA, AIG, AXP, DISK, LNC, MSFT, NOK, PIR, SUN
by: Midnight Trader


-Dow Industrial futures down 120 points.

-S&P 500 futures down 14 points.

-Nasdaq 100 futures down 20 points.

-Nasdaq-100 Pre-Market Indicator down 8.96 at 1304.14


Nikkei down 0.3%

Hang Seng down 0.5%

FTSE down 1.8%


(-,+) Large cap tech: mixed

(-) Chip stocks: lower

(-,+) Small cap stocks: mixed

(+,-) Drug stocks: mixed

(-) Software stocks: lower

(-) Internet stocks: lower

(-) Financial stocks: lower

(-,+) Auto stocks: mixed

(-,+) Airline stocks: mixed

(-,+) Retail stocks: mixed


(-) AIG (-4.6%) down as WSJ story reports low bids for asset management unit.

(-) Nokia (NYSE:NOK) (-6.4%) gets analyst downgrade.

(-) American Express (NYSE:AXP) (-1.7%) gets analyst downgrade.

(-) Sunoco (NYSE:SUN) (-0.2%) slips with oil price, despite upgrade.

(-) Alcoa (NYSE:AA) (-2.3%) lower ahead of post-bell earnings.

(-) Microsoft (NASDAQ:MSFT) (flat) trading mostly lower despite upgrade.

(-) Pier 1 Imports (NYSE:PIR) (flat) swings to loss on lower sales


(+) Lincoln National (NYSE:LNC) (+9%) repays some debt.

(+) Image Entertainment (OTC:DISK) (+47.5%) agrees to merger amendment with Nyx.


Wall Street is readying for back-to-back declines, a rarity in the four-week rally that has lifted the major indexes up more than 20 percent from 12-year lows hit in early March. Investors are unwilling to stick their necks out much more with another round of earnings reports set to unofficially begin with Alcoa's (AA) Q1 results in tonight's after-hours session. Analysts polled by Thomson Reuters expect the company to report a loss of $0.56 per share on revenue of $4.07 billion.

Financial stocks are positioning for a second consecutive down day following declines Monday on the back of a negative note on the sector from Calyon Securities analyst Michael Mayo. The analyst cut most of the big banks to Underweight ratings, saying he expects loan losses to exceed Depression-era levels. A London-based report that the International Monetary Fund was set to forecast $4 trillion in toxic assets on banks' books weighed on global markets and was a factor in early U.S. trade.

Technology shares are mostly lower. Microsoft (MSFT) is holding a mixed range through early pre-market trade, between 18.86 and 18.52, after RBC upgraded the stock to Outperform from Sector Perform - part of a broader upgrade in the software space.

There are no major U.S. economic reports due for release. Some policy changes abroad were in focus.

The Bank of Japan is expanding the types of collateral it will accept for loans as it held interest rates at 0.1%. But unexpectedly, the Reserve Bank of Australia cut its key lending rate by a quarter point to 3%, shy of the the half point the market was expecting. The bank also signaled the end of its easing cycle.

In addition to Alcoa's post-bell earnings, Bed Bath and Beyond (NASDAQ:BBBY) and Resources Connection (NASDAQ:RECN) report.