By Daniela Silberstein and Elizabeth Stanton
Jan. 22 (Bloomberg) -- U.S. stock futures retreated as companies from Microsoft Corp. to EBay Inc. reported disappointing earnings and data on housing starts and jobless claims signaled the recession is deepening.
Microsoft slumped 7.4 percent after the economic slowdown hurt demand for software. EBay sank 8.1 percent as fourth- quarter profit fell 31 percent and forecasts missed analysts’ estimates. Motorola Inc. slumped after Nokia, the world’s biggest mobile-phone maker, said industry sales may drop as much as 10 percent this year.
The Standard & Poor’s 500 Index was poised to trim yesterday’s 4.4 percent rally after initial claims for unemployment benefits matched a 26-year high and housing starts slumped to a record low.
“Corporate earnings are still bad,” said Claudio Meiger, who manages about $100 million at Basel, Switzerland-based CIC Schweiz AG. “The market is very news-driven, we take one step up on the good news and then we take two steps down again.”
Futures on the S&P 500 expiring in March fell 1.7 percent to 822.5 at 9:14 a.m. in New York. Dow Jones Industrial Average futures lost 1.5 percent to 8,053. Nasdaq-100 Index futures slipped 1.8 percent to 1,160.25.
U.S. stocks yesterday surged the most since Dec. 16 as President Barack Obama’s plan to shore up lenders and Bank of America share purchases by company executives sent financial equities to their biggest rally in two months. The S&P 500 is still off to its second-worst start, surpassed only by last year’s 9.8 percent drop during the first 13 days of trading, as analysts cut earnings estimates by a record 83 percentage points.
Europe’s Dow Jones Stoxx 600 Index climbed 0.4 percent, led by banks. The MSCI Asia Pacific Index rose 0.3 percent.
EBay, Motorola
EBay retreated $1.08 to $12.20. The world’s largest Internet auctioneer expects to earn as much as 34 cents a share in the first quarter, excluding some items. That trailed the 39- cent average estimate from analysts in a Bloomberg survey.
Motorola, the second-biggest U.S. seller of mobile phones, fell 11 cents to $4.40 in Germany.
UnitedHealth Group Inc., the largest U.S. health insurer, may be active after reporting a 40 percent decline in fourth- quarter profit as the recession stripped more Americans of medical coverage and the company settled legal claims it cheated doctors.
AllianceBernstein Holding LP, the U.S. asset-management affiliate of French insurer Axa SA, said fourth-quarter profit fell 72 percent, as investment losses and client redemptions eroded fees. The shares didn’t trade in Europe.
Profit Slump
U.S. analysts now forecast a 28 percent drop in profits for the fourth quarter after saying in March 2008 that earnings would rise as much as 55 percent. Nine of 10 industries in the S&P 500 may show lower fourth-quarter profits, the broadest slump since Bloomberg began compiling the data in 1998. The biggest losses may come from metal processors, financial institutions and companies reliant on consumer spending.
Apple Inc. rallied 8.7 percent to $90.07 in pre-market trading in New York. The maker of iPhones, Macintosh computers and iPod players reported first-quarter sales and profit that topped analysts’ estimates late yesterday.
Obama’s nominee for Treasury secretary, Timothy Geithner, pledged an expanded and prolonged government role in everything from stabilizing banks to ensuring credit for small businesses.
Geithner, who today may take a step toward confirmation with a Senate Finance Committee vote, told lawmakers yesterday “we’re at the beginning of this process of repairing the system, not close to the end.” He committed to “much more substantial action” on a “very dramatic scale.”
Citigroup slipped 7 cents to $3.60 after rallying 31 percent yesterday. The bank that received $45 billion in U.S. government funds named former Time Warner Inc. Chief Executive Officer Richard Parsons to head its board of directors, replacing Chairman Win Bischoff after posting a record $18.7 billion net loss last year.
Bank of America Corp. fell 12 cents to $6.56. JPMorgan Chase & Co. slipped 3 cents to $22.60.
To contact the reporters on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net
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