Stock futures waffle before earnings, economic data
Costco reports a rise in quarterly net income. Chevron cautions that third-quarter earnings may be lower. Alcoa delivers a surprise profit. The markets await the Fed's Beige Book survey.
By Andrea Tse
U.S. stock futures were wavering Wednesday as investors awaited third-quarter corporate announcements and some domestic economic releases.
"The market, in our opinion, is prepared to a large extent for the overall bad earnings comparisons that are about to be reported," said Scott Wren, senior equity strategist at Wells Fargo Advisors.
Futures for the Dow Jones Industrial Average ($INDU) were down by 25 points at 13,387. S&P 500 ($INX) futures were down by 0.70 points at 1,435. Futures for the Nasdaq ($COMPX) were falling by 0.25 points to 2,733.
Costco Wholesale (COST), the warehouse retailer, said Wednesday that fiscal-fourth-quarter net income rose 27%.
Costco earned $609 million, or $1.39 a share, up from $478 million, or $1.08, a year earlier. Net sales in the quarter were $31.52 billion compared with $27.59 billion. Including membership fees, revenue in the quarter was $32.22 billion.
Analysts were expecting earnings of $1.31 a share from Costco in its fiscal fourth quarter ended in September on revenue of $31.69 billion.
Meanwhile, Chevron (CVX) said third-quarter earnings would be "substantially lower" than in the second quarter as oil production declined in the first two months of the quarter and it received a lower price from the sale of oil.
The oil giant said production took a hit from a fire at its refinery in Richmond, Calif., and disruptions from Hurricane Isaac.
Aluminum producer Alcoa (AA) -- the first Dow component to report each quarter -- kicked off the unofficial start of the third-quarter earnings season Tuesday with a surprise profit, helped by productivity improvements and strong sales.
Shares of Alcoa rose marginally in after-hours action Tuesday.
Yum! Brands (YUM), the restaurant operator whose brands include Pizza Hut, Taco Bell and KFC, lifted its outlook for the full year to adjusted earnings of at least $3.24 a share after beating analysts' expectations in the third quarter.
The major U.S. stock averages finished just above session lows Tuesday as the International Monetary Fund's downgrade of its global economic outlook added to investor skittishness heading into the start of the new earnings season. Analysts anticipate seeing the first year-over-year earnings decline for the S&P 500 since the third quarter of 2009.
The Census Bureau is slated at 10 a.m. EDT to deliver wholesale inventories data for August; economists predict a rise of 0.5% after increasing 0.7% the prior month.
At 2 p.m. the Federal Reserve will be releasing its Beige Book business survey, which comes two weeks ahead of Federal Open Market Committee policy meetings, for September.
"Expect conditions across the nation to not quite jive with the drop in the unemployment rate to 7.8%. Otherwise, why would the FOMC have launched QE3? So, to put it shortly, this matters," said Stephen Guilfoyle, U.S. economist at Meridian Equity Partners.
Minneapolis Fed President Naryana Kocherlakota will speak to business and community leaders in Great Falls, Mont., at 2:45 p.m., and Dallas Fed President Richard Fisher is scheduled to speak to a Cato Institute conference at 4:45 p.m.
The FTSE 100 in London was down 0.41% and the DAX in Germany was lower by 0.29% Wednesday after the International Monetary Fund warned that if European leaders failed to carry out decisive policy measures urgently, the pressure on European banks could result in asset shrinkage by as much as $2.8 trillion to $4.5 trillion through the end of 2013.
The Nikkei Average in Tokyo closed down 1.98% and the Hang Seng in Hong Kong settled off 0.08% as wholesale auto deliveries in China shrank for the first time in eight months in September as escalating territorial tensions between Japan and China led consumers to refrain from purchasing vehicles manufactured by Japanese automakers Toyota (TM) and Nissan (NSANY).
November crude oil futures were down 45 cents at $91.94 a barrel. December gold futures were down 40 cents at $1,764.60 an ounce.
The benchmark 10-year Treasury was down 3/32, raising the yield to 1.730%. The dollar was up 0.09%, according to the dollar index.
In more corporate news, FedEx (FDX) set a goal Tuesday of improving profit by $1.7 billion over the next three years, largely by cutting costs at its underperforming express air division.
Details of the plan, unveiled by CEO Fred Smith at an investor meeting Tuesday, are expected to be disclosed at a meeting at 9 a.m. EDT Wednesday.
Wells Fargo (WFC) was sued by the federal government, which accused the bank of misrepresenting the quality of thousands of loans in order to be eligible for federal loan insurance.
Japanese automaker Toyota, which earlier along with several Japanese peers reported a bit hit to its China sales amid escalating territorial tensions between China and Japan, will recall 7.43 million vehicles globally including in the U.S., Japan and Europe for a faulty power-window switch.
Engine maker Cummins (CMI) reduced its full-year revenue estimate and said that it plans to slash its headcount by as much as 1,500 by the end of the year amid growing global economic uncertainties.
Specialty materials and chemicals producer Ferro (FOE) slashed its third-quarter earnings outlook amid its weakening solar pastes and metal powders business.
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word in california is this gas price mess will last until into december.
so there goes the christmas season for a big piece of the country population!
the stupid vote coming up to raise our sales tax to the highest in the nation is still leading in the poles.
so gear up for a rough future!
Gas in CA at $ 4.70 a gallon for regular and climbing ! There goes your CONSUMER CONFIDENCE ! HAVE A HAPPY HOLIDAY SEASON !
Barack Obama in 2012!
Chris Van Hollen in 2016 & 2020!
God bless America!
Yesterday was the 5 year anniversary of the historical high on the DOW of 14164 and the S&P at 1565.
Seems few noticed it around here?....I waited for someone to mention it..
Within a year it had fallen by 35%.
After the meltdown in 2008...the other bottom in March 2009 on 3/6/09; 1,313 days from yesterday hit an intraday low of 666.
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[BRIEFING.COM] The stock market ended the Wednesday session on a mixed note. The tech-heavy Nasdaq displayed relative strength, climbing 0.4%, while the S&P 500 added 0.2% with five sectors settling in the green. For its part, the Dow Jones Industrial Average (-0.2%) spent the entire session below its flat line.
Equities started the midweek affair on a rather unassuming note in the absence of market-moving news or economic releases. With those pieces missing from the equation, ... More
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