Before the bell: Citi earnings push futures higher despite MER, GOOG, MSFT disappointments

Posted Jul 18th 2008 7:42AM by Melly Alazraki
Filed under: Before the Bell, Major Movement, Earnings Reports, Google (GOOG), Microsoft (MSFT), Market Matters, International Business Machines (IBM), Citigroup Inc. (C), JPMorgan Chase (JPM), Merrill Lynch (MER), Oil

U.S. stock futures turned higher Friday morning after earnings from Citigroup that beat expectations offset disappointment from Merrill, Google and Microsoft. There was also some pressure from oil as prices rebounded to above $131 a barrel, following Nigeria cutting output.

Many on Thursday started wondering if we have seen the bottom. Stocks rallied for a second straight session as oil continued its price drop. Better -than-expected earnings for JPMorgan Chase (NYSE: JPM) again lifted banks. The Dow Jones Industrial Average gained 207.38 points, or 1.9%, the S&P 500 index rose 15.7 points, or 1.2%, and the Nasdaq Composite Index gained 27.45 points, or 1.2%.

Without any economic releases today, the market will continue to focus on earnings, and investors have a lot to mull, especially after Thursday's wave of financial results releases after the close, and with financials and techs being in the center of attention.

After JPMorgan Chase brought on some optimism with its results Thursday morning, Merrill Lynch (NYSE: MER) reported after the close a wider-than-expected loss of $4.65 billion, or $4.9 a share, on $9.7 billion of credit-market writedowns. The loss per share was larger than any analyst had expected according to Bloomberg survey. MER shares are declining over 4.8% in premarket trading.

But then, Citigroup Inc. (NYSE: C) reported this morning a smaller-than-expected loss. The largest U.S. bankposted a $2.5 billion second-quarter loss, or 54 cents per share on about $7.2 billion of credit-market writedowns. Analysts estimated the loss would be $3.67 billion, according to a Bloomberg survey. Citi shares are up over 4% this morning in premarket trading.

Also, three tech giants reported after the close Thursday: Microsoft Corp. (NASDAQ: MSFT), Google Inc. (NASDAQ: GOOG) and IBM (NYSE: IBM). Google missed expectations despite posting a 35% growth in profit and its stock is over 7.2% lower in premarket trading. Similarly, Microsoft also missed Wall Street's expectations despite posting a 13% profit growth and MSFT shares are down over 5.5% in premarket trading. IBM, however, topped estimates with its 22% profit growth.

Many more earnings were reported Thursday and this morning. Will the ones that beat expectations offset the disappointments? This is how today's session will likely play out.

Tags: c, featured, goog, ibm, jpm, mer, msft