MarketWatch.com - Pre-Market Indications

Tuesday, January 19, 2010

Indications: U.S. futures weaker as Citi reports loss

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By Steve Goldstein, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures were in the red Tuesday after a three-day break, with Citigroup's quarterly loss and a costlier Kraft Foods bid for Cadbury not changing market sentiment after last week's decline.

S&P 500 futures fell 4.3 points to 1,128.00 and Nasdaq 100 futures fell 2 points to 1,860.20. Futures on the Dow Jones Industrial Average fell 31 points.

U.S. stocks finished lower last week, with the S&P 500 retreating 0.8%.

"The market is probably counting on at least some earnings leverage to become evident," said Bill Stone, chief investment strategist of PNC Wealth Management.

"Some sign of increasing revenues will likely be crucial," he said.

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Citigroup /quotes/comstock/13*!c/quotes/nls/c (C 3.41, -0.01, -0.29%) became the second major bank after J.P. Morgan Chase /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 43.68, 0.00, 0.00%) to release results, and reported a $7.6 billion quarterly loss, or $1.4 billion of red ink when excluding repaying TARP and exiting government protection over assets.

Citi took provisions for loan losses of $8.2 billion -- though that's down 36% from the prior-year period, and down 10% from the third quarter.

Citi shares slipped 1.8% in pre-market action minutes after the release.

After the close, International Business Machines /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 131.81, +0.03, +0.02%) reports results.

There were a number of deals announced over the last two days, with Warren Buffett having a piece in many of them.

Buffett-held Kraft Foods /quotes/comstock/13*!kft/quotes/nls/kft (KFT 29.58, 0.00, 0.00%) improved its cash-and-stock offer for Cadbury /quotes/comstock/13*!cby/quotes/nls/cby (CBY 51.90, 0.00, 0.00%) to $19.5 billion, a bid that won the support of the U.K. chocolate producer and doesn't need the approval of Kraft shareholders. See story.

Kraft shares fell over 2%, while Cadbury's U.S.-listed shares rose nearly 5% in pre-market trade.

Buffett's Berkshire Hathaway /quotes/comstock/13*!brk.a/quotes/nls/brk.a (BRK.A 97,500, 0.00, 0.00%) also paid $1.3 billion for U.S. life insurance business from Swiss Re. And the Omaha, Nebraska-based firm is looking to increase its stake in Korean steelmaker Posco, according to a Bloomberg News report.

Outside of the Buffett sphere, Tyco International /quotes/comstock/13*!tyc/quotes/nls/tyc (TYC 37.61, +0.07, +0.19%) said it's buying Brink's Home Security Holdings /quotes/comstock/13*!cfl/quotes/nls/cfl (CFL 31.42, 0.00, 0.00%) for $2 billion in cash and stock, sending Brink's shares up 30% in pre-market trade.

Williams Cos. /quotes/comstock/13*!wmb/quotes/nls/wmb (WMB 21.37, 0.00, 0.00%) , Williams Partners /quotes/comstock/13*!wpz/quotes/nls/wpz (WPZ 30.79, 0.00, 0.00%) and Williams Pipeline Partners /quotes/comstock/13*!wmz/quotes/nls/wmz (WMZ 23.35, 0.00, 0.00%) announced a restructuring in a deal the firms valued at $12 billion.

Japan Airlines filed for bankruptcy protection. The SkyTeam alliance that includes Delta Air Lines /quotes/comstock/13*!dal/quotes/nls/dal (DAL 12.76, +0.02, +0.16%) and Air France-KLM is trying to get the carrier to switch from its current oneworld grouping that includes AMR Corp.'s /quotes/comstock/13*!amr/quotes/nls/amr (AMR 8.08, -0.01, -0.12%) American Airlines and British Airways.

Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 205.93, 0.00, 0.00%) started issuing invitations for an event to be held next week in which the company is widely anticipated to roll out an electronic tablet.

The economics calendar features November Treasury inflows data and a January home builder index. Overseas, U.K. inflation accelerated at the highest rate on record in December and the Bank of Canada is due to make an interest rate decision.

The U.K. data buoyed the British pound, while the euro was weaker after worse-than-forecast German investor sentiment and continued concerns about Greece's debt situation.

Oil futures traded below $78 a barrel.

The Nikkei 225 declined 0.8% in Tokyo while the German DAX fell 0.9%.

Steve Goldstein is MarketWatch's London bureau chief.


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