Wall Street headed for sharply lower opening

[January 23, 2009]  NEW YORK (AP) -- Investors are set for a big sell-off on Wall Street Friday as many corporate earnings reports are falling short of estimates and the British economy has been officially declared in recession. Stock futures pointed to a sharply lower opening.

The economic slowdown continues to wear on economies worldwide. The British government released data Friday showing the country's economy shrank 1.5 percent in the fourth quarter, after shrinking 0.6 percent during the third quarter. The fourth-quarter contraction was the worst in Britain since 1980.

And the biggest maker of flat-screen TVs, Samsung Electronics, posted its first-ever quarterly loss. The South Korean electronics manufacturer lost 20 billion won, or $14.4 million. Samsung's report comes a day after Sony Corp. projected its first annual loss in 14 years and LG Electronics Inc. reported a record quarterly loss.

Dow Jones industrial average futures fell 167, or 2.06 percent, to 7,925. Standard & Poor's 500 index futures declined 15.2, or 1.84 percent, to 810.30, while Nasdaq 100 index futures fell 22.25, or 1.90 percent, to 1,150.00.

Futures moved off earlier lows after Dow component General Electric Co. reported fourth-quarter profits Friday morning that were in line with analysts expectations and at the bottom end of the company's previous guidance. But, GE results were not enough to help rally markets.

Copier and printer maker Xerox Corp. posted a profit of $1 million. Excluding one-time charges, Xerox still fell short of analysts expectations because of weakening sales.

Capital One Financial Corp. became the latest financial firm to report weak quarterly results. The financial services firm, which is primarily focused on credit card lending, late Thursday reported a fourth-quarter loss as it set aside $2.1 billion to cover defaulting loans. Analysts were expecting the company to post a profit.

The financial industry has been among the hardest hit during a volatile week that has seen triple-digit swings in the Dow Jones industrial average each of the last three days.

Advanced Micro Devices Inc. said late Thursday it narrowed its quarterly loss, but still failed to meet analyst expectations. The chip maker is the latest technology firm to report quarterly struggles, following rival Intel Corp. last week and software firm Microsoft Corp., which reported disappointing results Thursday.

Sales at AMD fell 33 percent and the company expects another drop in the first quarter.

One of the lone bright spots among earnings reports was Google Inc.'s ability to beat analysts' estimates as it reported quarterly earnings after the market closed Thursday. Excluding special one-time charges, Google earned about $5.10 per share, compared with analysts' expectations for profit of $4.95 per share, according to Thomson Reuters.

Elsewhere in corporate news, The Wall Street Journal is reporting drug maker Pfizer Inc. is in talks to acquire rival Wyeth in a deal valued at more than $60 billion. Citing unidentified sources, the Journal said the discussions have been going on for months, but a deal is not imminent.

Meanwhile, oil prices fell 81 cents to $42.86 a barrel in premarket electronic trading on the New York Mercantile Exchange.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.55 percent from 2.60 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.10 percent from 0.09 percent late Thursday.

The dollar mostly rose against other major currencies, while gold prices rose.

Overseas, Japan's Nikkei stock average fell 3.8 percent. In afternoon trading, Britain's FTSE 100 declined 1 percent, Germany's DAX index fell 2.2 percent, and France's CAC-40 declined 2 percent.

___

On the Net:

New York Stock Exchange: http://www.nyse.com/

Nasdaq Stock Market: http://www.nasdaq.com

[Associated Press; By STEPHEN BERNARD]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.