Before the bell: Futures lower on financials, tech concerns

Posted Jun 26th 2008 7:48AM by Melly Alazraki
Filed under: Before the Bell, Earnings Reports, Analyst Reports, Analyst Upgrades and Downgrades, Market Matters, Citigroup Inc. (C), Merrill Lynch (MER), Research in Motion (RIMM), Lennar Corp'A' (LEN), Oracle Corp (ORCL), Economic Data, Oil, Housing, Federal Reserve

U.S. stock futures were lower early Thursday, a day after the Federal Reserve announced rates will be kept steady. Investors this morning are mostly concerned about financials following Goldman Sachs downgrades of several banks. Wall Street is also worried about the outlook for tech stocks after both RIM and Oracle reported quarterly results Wednesday and gave a tepid outlook.

On Wednesday, U.S. stocks managed to end the session with moderate gains as oil prices declined. The Federal Reserve held interest rates at 2%, saying inflation has become a higher risk to U.S. economy. The Dow industrials rose 4 points, or 0.04%, the S&P 500 added 7 points, or 0.58%, and the Nasdaq Composite rose nearly 33 points, or 1.39%.

In economic news, final first quarter GDP will be reported at 8:30 a.m. EDT, with economists expecting a slight revision upward. At the same time, weekly jobless claims is due out. Finally, at 10:00 a.m., May existing home sales figures will be released, and economists expect a small growth in sales.

Meanwhile, oil prices rose Thursday after a steep decline Wednesday following a report showing increase in U.S. inventories. Crude is back above $135 a barrel this morning as buyers came back to the market.

In corporate news, several main stories are capturing the headlines this morning:

A Goldman Sachs analyst downgraded U.S. brokers from Attractive to Neutral, saying Citigroup (NYSE: C) may write down an additional $9 billion and raise more capital and Merrill Lynch (NYSE: MER) will likely incur $4.2 billion of write-downs in the second quarter. Citi stock is down 3.5% and MER 2.3% in premarket trading.

Homebuilder Lennar (NYSE: LEN) posted a narrower second-quarter loss and said the housing market conditions will continue to deteriorate even more this year.

Both Oracle (NASDAQ: ORCL) and Research in Motion (NASDAQ: RIMM) reported results Wednesday after the close. RIM's profit doubled during the quarter, but the results and guidance fell short of analysts' expectations. The stock is down nearly 9% in premarket trading. Oracle, on the other hand, posted very strong results, beating estimates. After investors cheered, pushing the stock price higher in after-hours trading, Oracle dampened investor sentiment later as it said the slowdown will increase in the traditionally sluggish summer months. Shares have been punished and are down 3.3% in premarket trading.

Tags: c, featured, len, mer, orcl, rimm