US stock futures sag after weeklong run

[July 22, 2009]  NEW YORK (AP) -- Stocks appear headed for a lower opening as investors await the latest batch of corporate earnings reports.

U.S. stock futures are following European markets down, with investors taking a breather after a weeklong run that has sent major indexes up to fresh multimonth highs.

Investors have sent stocks up in recent days, pleased by a flood of better-than-expected earnings reports and improving outlooks from companies like Caterpillar Inc. But there is still evidence of pain among certain sectors, like banking and retail, that depend on the financial health of consumers.

On Wednesday, Whirpool Corp., the world's largest maker of major home appliances, said its second-quarter profit dropped 33 percent on weak consumer demand.

Later, investors will get more reports from a number of financial firms, including Morgan Stanley, Wells Fargo & Co. and U.S. Bancorp.

Though banking giants like Goldman Sachs Group Inc. and JPMorgan Chase & Co. fueled investor optimism last week by reporting strong earnings reports, their gains came largely from their trading businesses, which offset higher loan losses. Regional banks, on the other hand, don't have the same exposure to capital markets as their big bank counterparts and therefore are more vulnerable to rising defaults. Worries about still-rising losses at regional banks put pressure on stocks on Tuesday.

Among the other companies issuing results Wednesday are Boeing Co. and eBay Inc.

Some pause in buying is to be expected after a rally that has driven the Dow Jones industrial average up 9.4 percent over seven sessions. The Dow is now in the black for the year, standing as its highest level since January, while the benchmark Standard & Poor's 500 index is at its highest mark since November. Meanwhile, the tech-heavy Nasdaq, which is at October levels, had its tenth straight gain on Tuesday -- its longest winning streak since July 1997.

Ahead of the market's open, Dow Jones industrial average futures are down 49, or 0.6 percent, to 8,837. Standard & Poor's 500 index futures are down 5.10, or 0.5 percent, to 948.30, while Nasdaq 100 index futures are down 3.75, or 0.2 percent, to 1,550.25.

Major market indexes seesawed throughout much of Tuesday's trading session, but managed to end the day up less than 1 percent. In addition to worries over banks, investors also battled a mixed report from Federal Reserve Chairman Ben Bernanke, who cautioned that the economy's recovery will be gradual because of rising unemployment. But he assured investors that once the economy is back on track, inflation will be subdued.

Bernanke will continue his two-day address to Congress on Wednesday, speaking in front of the Senate Banking Committee.

Tech shares are likely to be in focus after Yahoo Inc. and Apple Inc. posted better-than-expected profits late Tuesday.

Yahoo's earnings rose 8 percent -- the company's first quarterly earnings improvement since the beginning of 2008. However, sales slid 13 percent.

Apple, meanwhile, surpassed Wall Street's expectations in both profit and revenue on robust sales of laptops and iPhones. Shares shot up $5.69, or 3.8 percent, to $157.20 in premarket trading.

Bond prices fell in early trading Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.50 percent from 3.48 percent late Tuesday.

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

Oil prices fell 80 cents to $64.81 a barrel in electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average rose 0.7 percent, while Hong Kong's Hang Seng index fell 1.3 percent. In late morning trading, Britain's FTSE 100 was down 0.1 percent, Germany's DAX index slipped 0.2 percent, and France's CAC-40 fell 0.6 percent.

[Associated Press; By SARA LEPRO]

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