U.S. Market Preview: Indexes Point Lower

Futures

As of 8:45 AM ET

S&P 500: +0.00; 1,483.75
NASDAQ 100: -1.25; 2,093.25
Dow: -14; 13,408
10-Year Treasury [price/yield]: 102.719/3.92%
Oil: -0.86%; $87.95 (-$0.76)
Gold: -0.43%; $785.70 (-$3.40)

U.S. Breaking News

see today's Wall Street Breakfast for earlier news

E*Trade Falters After Analyst Says More Cash Needed

Shares of troubled online broker E*Trade Financial (ETFC) fell heavily in pre-market trading after Banc of America Securities downgraded the stock, saying Citadel Investment Group was the clear winner in its $0.27-on-the-dollar purchase of the firm's debt. Analyst Michael Hecht cut the firm to Sell from Neutral, and slashed his price target to $2 from $9, while lowering his 2008 EPS estimate to a $0.20 loss from a $1 profit. On Thursday, E*Trade said it was receiving a $2.55 billion capital infusion from a consortium led by Citadel, in which it will buy E*Trade's $3 billion portfolio of asset-backed securities for about $800 million, and buy $1.75 billion in 10-year notes yielding about 12.5%; Citadel will end up owning almost 20% of E*Trade, and receive a seat on the company's board (full story). After an initial positive reaction, shares fell after the Street digested the high-cost and dilutive terms of the deal, leading several brokerages to cut E*Trade earnings estimates Friday. Hecht called E*Trade's retail brokerage a "dwindling asset," and says he expects the best-case scenario for E*Trade to be another $1 billion addition to its reserves to prop up its $12 billion home-equity portfolio, while the worst case could see the company forced to sell its entire home-equity portfolio. Hecht called the move "odd," and said it raises the question of how much has really changed at the firm. E*Trade shares are down almost 80% YTD, and are currently off another 16% in pre-market trading.

Sources: Reuters, MarketWatch

MetLife's 2008 Guidance Disappoints; Plans $2.2B Buyback

MetLife Chairman and CEO C. Robert Henrikson issued an optimistic business outlook early Monday, but the company's 2008 EPS guidance of $5.90 to $6.20 is short of the Street's expectations of $6.26, which may put downward pressure on its shares. Nevertheless, the company's upward revised current year outlook is a penny better than estimates at the high-end range: $6.04 to $6.09 vs. $6.08. MetLife had previously raised its current year EPS forecast in July to $5.65 to $5.80, from $5.05 to $5.30 (full story). MetLife said it expects Q4 EPS of $1.40 to $1.45, compared to analyst estimates of $1.43. In a statement, Mr. Henrikson commented, "With our businesses poised to expand upon their strong performance in 2007, we are excited about 2008. On a global basis, we see a number of opportunities where MetLife is well positioned to expand its growth." The company said it is targeting operating return on equity of 13.0% to 13.6% in 2008 and 15% by year-end 2010. MetLife also said it expects to repurchase $2.2B in common stock in 2008. Shares of MetLife rose 1.1% to $65.59 on Friday and were last down 1.4% to $64.68 in thin pre-market trading.

Sources: Press release, MarketWatch
Commentary: Citigroup Names Most-At-Risk Life Insurers • Jim Cramer's Take on MET • The Imminent Death of the Insurance Industry
Stocks to watch: MET. Competitors: PRU, AZ, AIG. ETFs: KIE, IAK

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

Today's Market

(via Sam Collins, ChangeWave.com)

Recap of Last Week's Action

Stocks closed higher for the fourth-straight day on Friday, and the Dow Jones Industrial Average posted the best week since March and the best four-session rally since March 2003.

The buying started on Tuesday when the Abu Dhabi Investment Authority announced that it would take a 4.9% interest in beaten-down Citigroup (C), giving investors confidence that the financial sector's woes may be coming to an end.

Then on Wednesday, Federal Reserve Vice Chairman Donald Kohn said that interest rates may be cut again when the Federal Open Market Committee meets on Dec. 11, and his comments were echoed on Thursday evening by none other than the Fed chief himself, Mr. Bernanke.

But despite the encouraging comments from the Fed chairman, Friday's performance was mixed -- with technology stocks struggling as a result of Dell Inc. (DELL) forecasting much slower growth in 2008. DELL fell by $3.60 and closed at $24.54, down 12.8%.

But while technology stocks faltered, the financials did well, with Merrill Lynch (MER) closing up $2.53 and several Dow components making some decent up moves -- particularly Citigroup (C), which gained $1.01; JPMorgan (JPM), up $1.97; and American Express (AXP), up $2.09.

At Friday's close, the Dow was up $59.99 at 13,372, and the S&P 500 gained 11 at 1,481. But on the weakness in techs, the Nasdaq was off seven points and closed at 2,661. The NYSE traded upward of 1.9 billion shares, and the Nasdaq crossed 2.5 billion. Breadth was a positive 2-to-1 on the Big Board but just barely positive on the Nasdaq.

For the week, the Dow rose 3% but ended the month down 4%, while the S&P 500 was up 2.8% for the week but off 4.4% for the month. The Nasdaq gained 2.5% for the week and lost 6.2% in November. For the year, the Dow is up 7.3%, the S&P 500 is ahead by 4.4%, and the Nasdaq leads the field by being ahead 10.2%.

On Friday, crude oil (January contract) fell $2.30, closing at $88.04 a barrel, and the Amex Energy SPDR (XLE) gained 22 cents to close at $73.47. And on Friday, the February gold contract fell $13.20, ending at $789.10 per troy ounce, and was down $42.70 for the week. The Philly Gold and Silver Index [XAU] dropped $1.76 to $171.07.

What the Markets Are Saying

After the huge advance following last Monday's reversal, the major averages have run almost to the heart of the trading zone that has held since last March, and this is at S&P 1,490. Momentum is in favor of the bulls, but the rally was no doubt the result of good news hitting the markets at the time that they were grossly oversold.

Following such a sharp rally, it would make sense that stocks might run out of gas quickly. If that happens, look for a quick test of the support that, on the S&P 500, is now at 1,370 to 1,407. However, it is likely that a pullback might even find support just a bit higher than that -- more likely 1,407 to 1,440.

Last week's performance was impressive and tells us that the chances are very high that the worst is over. And so, if profit-taking does take place, it should offer us a great opportunity to take new positions.

Today's Trading Landscape

Look for earnings from BearingPoint Inc. (BE), CMGI Inc. (CMGI), Cost Plus Inc. (CPWM), Gladstone Capital Corp. (GLAD), Guess? Inc. (GES), Isle of Capri Casinos Inc. (ISLE), Mitcham Industries Inc. (MIND), Orascom Telecom SAE (ORSTF), Phillips-Van Heusen Corp. (PVH), SandRidge Energy Inc. (SD), Severstal Co., Talk America Holdings Inc, and Tutogen Medical Inc. (TTG).

The only economic report today is the ISM for November which is expected to be at 50.5%. Two world political events are of interest today: Venezuelan President Hugo Chavez lost an election on a constitutional issue that would have expanded his power. And in Russia, Vladimir Putin's party won control of Parliament, which will allow them to amend the constitution -- allowing him to extend his term as president. In corporate news, Vivendi plans to buy a controlling interest in Activision (ATVI).