Futures drop on profit unease, but Wal-Mart up
Stock index futures fell on Thursday as investors fretted about the outlook for corporate profits and news that Lehman Brothers (LEH.N: Quote, Profile, Research) put $1 billion of soured assets onto its balance sheet.
Retailers were also a focus as they released March sales reports. Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) posted same-store sales that fell short of Wall Street’s forecasts but raised its profit forecast. Shares of Wal-Mart, a Dow component, rose 2 percent to $55.24.
But a headwind for stocks was the price of oil, which traded above $111 a barrel and near a record high set on Wednesday.
Shares of Lehman Brothers were down more than 5 percent in Europe after the Wall Street bank said in a regulatory filing it liquidated three floundering investment funds and put $1 billion of assets onto its balance sheet.
Home goods retailer Bed Bath & Beyond Inc (BBBY.O: Quote, Profile, Research) joined United Parcel Service Inc (UPS.N: Quote, Profile, Research) and others when it gave a quarterly profit forecast well below Wall Street’s estimates quick payday loan. Its shares dropped 5 percent after the bell from a Nasdaq close of $29.47.
“We have entered a very cautious phase with investors very much on edge about earnings,” said Peter Cardillo, chief market economist at Avalon Partners.
“We also have oil prices making new highs and the dollar making new lows against the euro. While the averages are not falling apart, we’ve certainly embarked in a cautious, downward trading range.”
S&P 500 futures fell 6.4 points, but were above fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract.