In the Headlines
The global market picture was still ugly early Tuesday. U.S. stock futures pointed lower, yet again, after NYSE indices undercut Aug. 9 lows in Monday's session.
Traders and investors are awaiting today's Capitol Hill testimony from Fed chief Ben Bernanke. He'll almost certainly field questions about the initial impact of Operation Twist, the central bank's effort to drive down long-term interest rates.
Markets may also react if Bernanke's statements about the economy differ -- to the upside or downside -- from the FOMC statement a few weeks ago, which spooked traders. Bernanke's testimony begins at 10 a.m. EDT.
European stocks showed steep losses prior to Wall Street's open. As has often been the case, banks were suffering on worries that institutions with exposure to Greece would have to take a bigger hit than earlier expected.
Deutsche Bank (DB) said it would not hit its profit target for the year on a shortfall in its investment-banking unit. French-Belgian bank Dexia, which is traded in Brussels, plummeted on break-up concerns. That also had an impact on the sector.
European airlines were also big decliners, following yesterday's plunge in American Airlines' parent AMR (AMR) on bankruptcy worries.
The euro edged higher against the dollar early Tuesday.
Economic concerns hit Asian stocks Tuesday, on growing fear that China is slowing. In addition, traders reflected their nervousness about the European crisis affecting Asian banks. The sector sold off throughout the region. Meanwhile, Japan's manufacturers were hit on a strengthening yen and disappointing auto sales results from the U.S. However, the dollar rose vs. the yen early Tuesday.
Though it's a busy week for U.S. economic data, today is the calm before the storm. The only significant announcement on Tuesday's calendar is the Commerce Department's report on August factory orders at 10 a.m. Economists expect a decline of 0.1%, following July's increase of 2.4%.
Monday's better-than-expected manufacturing and construction data failed to have a positive effect on trading.
Economic slowdown worries showed up in commodities trade this morning. Crude fell $1.47 to $76.14 per barrel in Nymex trade.
Gold was on the rise again, gaining $5.30 to $1663 per ounce. Industrial metal copper slipped $0.0415 to $3.11 per pound.
Apple (AAPL) holds an event at its Cupertino, Calif., headquarters to show off its iPhone 5. Company watchers will be attentive to the first event hosted by new CEO Tim Cook. Also of interest is the latest version of Apple's mobile software, iOS5, as well as Apple's new iCloud service. Apple shares fell $1.94, 0.52%, to $372.66 ahead of the bell.
In today's earnings news, restaurant operator Yum! Brands (YUM) is due after the bell. The company's comments about both its U.S. and China businesses are sure to be picked over thoroughly. In its third quarter, the company is expected to earn $0.83 per share on sales of $3.10 billion. Yum's brands include Pizza Hut, KFC and Taco Bell. Shares were down $0.88, or 1.8%, to $48.45 in premarket action.
Price movers in early trade included Wynn Resorts (WYNN), getting a bounce after plunging in recent weeks on China slowdown concerns. Much of the company's revenue comes from its Macau business. Wynn was upgraded to Buy from Neutral at Nomura. Shares declined $0.64, 0.58%, to $110.03 ahead of the bell.
Oil-services firm Schlumberger (SLB), which skidded more than 23% last month, added to its woes early Tuesday, dropping $1.22, 2.1%, to $56.50. Schlumberger is an example of a stock with huge technical damage despite a good fundamental track record and sunny earnings estimates for the coming years.
Citigroup (C) slumped $0.49, 2.1%, to $22.62 in premarket trade. Analysts continue to fret about potential losses due to bad mortgages and related legal claims. The stock is down 51.14% year-to-date.
Chipotle Mexican Grill (CMG) was initiated with a rating of Outperform at Credit Suisse. Though shares of the momentum leader are trading below their 50-day moving average, they're still holding up well compared to the general market. Both earnings and sales growth have slowed in the past couple of quarters. Shares are down in early action, losing $4.70, or 1.6%, to $288.
SodaStream (SODA) was upgraded to Buy from Hold at Deutsche Bank. Share price has fizzled in recent weeks, despite solid earnings, sales and estimates. Deutsche Bank cited the price drop in its move, and lowered its price target to $40 from $50. Shares are up $0.38, or 1.3%, to $29.50 in early trade.