Futures Lower on Highest PPI Reading Since 1973

Includes: DIA, IEF, QQQ, SPY
by: Jonathan Liss

U.S. Futures were significantly lower Thursday with the Dow weighing in at 13,365, down 135 points, the S&P 500 down 18.2 points and the Nasdaq 100 lower by 23.25 points (as of 8:32 AM ET). The losses followed global indexes lower Thursday, with the Nikkei and Hang Seng shedding 2.5% and 2.7% respectively (full story) and France's CAC 40 leading European indexes lower in mid-day trading Thursday, down 1.7% (full story).

At 8:30 AM ET, November PPI came in at 3.2% - its highest reading since 1973, and well above consensus expectations for an increase of 1.5%. Core PPI was up 0.4%, versus estimates for a gain of just 0.2%. On a positive note, November retail sales climbed 1.2%; the market was expecting growth of just 0.6%. Futures, already down, fell further as the PPI report stoked inflationary concerns.

Wednesday the Fed announced a two-point plan to thaw the credit markets including the establishment of a temporary Term Auction Facility and the establishment of foreign exchange swap lines with the European Central Bank and the Swiss National Bank (full story). Market doubts about the plan were one reason cited for a lower open Thursday.

Countrywide Financial Corp. (CFC) fell 3.5% pre-market Thursday after announcing its November 2007 operational results. Mortgage loan fundings totaled just $23 billion for the month, down 40% Y/Y, but up 5% from October 2007.

Lehman (LEH) saw its Q4 earnings fall slightly Y/Y, but topped Wall Street estimates for both EPS ($1.54 vs. $1.42) and revenue ($4.39B vs. $4.26B). Shares were nonetheless down 3.35% in pre-market action (full story).

Costco (NASDAQ:COST) posted Thursday FQ1 2008 net income and revenue that matched analyst estimates, with profits up 11% despite a slowing U.S. economy. Shares were down 5% pre-market as investors were concerned the company wouldn’t be able to keep up its robust growth going forward (full story).

January crude contracts stayed above $94/bbl Thursday, after gaining more than $4 Wednesday as inventories fell for a fourth straight week (full story). Gold fell $6.40 to $812; 10-year T-bills were at 101-10+ (yield = 4.09%).

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