New York -- Wall Street aimed to open Tuesday's trading session lower amid news that investment banking giant Citigroup (C: 29.06, +0.50, +1.75%) would slash its quarterly dividend by 40%, cut jobs and post $18.1 billion in write downs related to mortgage-backed securities.
Also, economic news ranging from inflation to retail sales are due out this morning are weighing heavily on traders' minds.
The Dow Jones Industrial Average futures fell 38 points, or 0.3%, to 12760 as of 7 a.m. EST in New York. The Standard & Poor’s 500 index futures dropped 6.3 points, or 0.44%, to 1414 and the Nasdaq 100 futures fell 8 points, or 0.41%, to 1947.
Citi posted a fourth quarter loss of $1.99 a share, compared to a profit of $1.03 from the same period last year. As part of that loss, Citi's new Chief Executive Vikram Pandit cut the company's quarterly dividend from 54 cents a share to 32 cents a share. Analysts had expected a loss of $1.03 a share. Citi shares rose slightly on the news.
The company also said it was raising $12.5 billion in convertible stock and securities to help bolster the company's damaged balance sheet. This would be the second time the bank has appealed to foreign investors, after the company received a $10 billion investment from Abu Dhabi Investment Authority late last year.
Rumors that Citi would have to cut its dividend have circulated since October, when CIBC World Markets analyst Meredith Whitney said Citi would have to cut the dividend for the company to survive.
Whitney's call was highly controversial - both investors and the company itself vehemently denied that Citi was in that precarious of a financial situation that it required slashing the company's dividend. A few other banks, most notably Goldman Sachs (GS: 201.65, +2.91, +1.46%), eventually agreed with Whitney's assessment of Citi.
Another Wall Street firm is in the news this morning. Brokerage house Merrill Lynch (MER: 55.97, +1.28, +2.34%) said it had raised $6.6 billion in investments from foreign investors to help shore up the company's balance sheet. Merrill will sell preferred stock to Korea Investment Corporation, Kuwait Investment Authority and Mizuho Financial Group of Japan for $52.40 a share. The convertible security will pay a 9% dividend.
Outside of Citi's and Merrill's announcement, Wall Street will be watching for a series of economic data, including the U.S. government's gauge of monthly retail sales, the Empire State manufacturing index and the producer price index are all due out before the market opens. The producer price index, or PPI, will be key to watch to see if high commodity prices are working their way into the cost of goods for the manufacturers, which in turn will affect consumers.
On Monday, Wall Street got an unexpected and positive update from IBM (IBM: 102.93, +5.26, +5.38%) that kept the market on the positive side for the entire day.
In yesterday's trading, the Dow Jones Industrial Average rose 171.85 points, or 1.36% to 12778.15, the Standard & Poor’s 500 index gained 15.23 points, or 1.09% to 1416.25 and the Nasdaq Composite Index rose 38.36, or 1.57%, to 2478.30. The consumer-friendly Fox 50 picked up 11.71, or 1.16%, to 1022.16.
Oil fell 48 cents, or 0.51%, to $93.72 a barrel in New York. Gold gained $4.80 overnight to $908.20 an ounce in New York.
World Markets -
Both European and Asian markets fell overnight. The Dow Jones Euro Stoxx 50, a index tracking the 50 largest companies of Europe, fell 16.81 points, or 0.4%, to 4219.87. The FTSE 100, London's benchmark index, dropped 62.80, or 1.01%, to 6152.90.
France's CAC 40 Index fell 32.86 points, or 0.61%, to 5370.65 and Germany's DAX dropped 34.10, or 0.44%, to 7697.92.
Japan's Nikkei 225 Index fell overnight, dropping 138.16 points, or 0.98%, to 13972.63. Hong Kong's Hang Seng Index fell 630.35, or 2.38%, to 25837.78.
No comments:
Post a Comment