Before the bell: Merrill, Amazon take stocks down

U.S. stock futures were weaker early this morning, pointing to a lower start on Wall Street. Investors became concerned after Amazon reported results yesterday and gave a weak outlook and guidance. Today, Merrill Lynch is to report earnings before the opening bell and the Wall Street Journal and New York Times reported the bank may suffer a bigger loss than estimated due to larger writedowns following the subprime crisis. Merrill's results could affect the way the market is going especially if it renews credit worries.

Yesterday, U.S. stocks gained, following upbeat results from Apple Inc. (NASDAQ: AAPL), American Express (NYSE: AXP), DuPont (NYSE: DD) and others. The Dow industrials rose 109 points or 0.81%, the S&P 500 rose 13 points or 0.88% and the technology heavy Nasdaq Composite rose 45 points or 1.65% to close near a six-year high.

Today the main economic data due is September existing home sales, released at 10:00 a.m., which is expected to decline.
Weekly crude inventories, will be reported at 10:30. Oil prices dropped further today to below $85 a barrel ahead of the data release as inventories are expected to grow.

Overseas, Asian stocks declined and European markets were generally lower in early trading.

Merrill Lynch & Co. (NYSE: MER) will add about $2.5 billion of writedowns to the $5 billion it disclosed October 5, the New York Times reported. After warning it will post the first quarterly loss in six years due to the subprime mortgage issues, analysts were estimating it would report a third-quarter loss of 45 cents a share. The loss now could be larger and affect the market as it seems more and more apparent the the banking industry did not account well for the risk involved in subprime mortgages and mortgage backed securities. It also shows that the extent of the problem is also not fully known yet. MER shares are down 3.3% in premarket trading.

The tech sector, which has been enjoying a nice ride the past little while with Apple yesterday further pushing it up, may be hit today after Amazon.com, Inc. (NASDAQ: AMZN) disappointed investors when it only beat estimates by a penny and gave a poor outlook yesterday when it reported results after the close. Concerns over Amazon's margins also played part in Amazon shares tumble in premarket trading of over 8.5%.

Reporting today: Corning (NYSE: GLW), ConocoPhillips (NYSE: COP) and Boeing (NYSE: BA).