U.S. StockIndex Futures Decline; General Motors AIG Retreat
U.S. Stock-Index Futures Decline; General Motors, AIG Retreat
By Andreas Hippin
Feb. 12 (Bloomberg) — U.S. stock-index futures dropped on
concern further credit-related losses and slowing economic growth
will curb corporate profits.
General Motors Corp., the world;s biggest automaker, and
Applied Materials Inc. declined in Europe before reporting
earnings. American International Group Inc. fell after Lehman
Brothers Holdings Inc. downgraded the shares on concern the
largest insurer by assets will write down more credit-related
investments.
Standard %26amp; Poor;s 500 Index futures expiring in March fell
1.80 to 1,336.4 as of 10:17 a.m. in London. Dow Jones Industrial
Average futures decreased 15 to 12,223. Nasdaq-100 futures
dropped 3 to 1,794.25.
“A recession in the U.S. remains the main concern,;; said
Monika Rosen, who helps manage the equivalent of $41 billion as
head of research at BA-CA Asset Management in Vienna. “The
subprime crisis is having repercussions in insurance, consumer
credit and auto loans. It;s uncertain what this means for private
consumption, the main pillar of the U.S. economy.;;
Stocks gained yesterday as a rally in oil prices boosted
energy shares, outweighing concern that financial companies face
more writedowns after AIG said it understated losses in some
assets.
General Motors fell 16 cents to $26.96 in France. The
company will report a fourth-quarter loss in North America today
that;s wider than analysts; estimates, as costs such as rebates
rose, two people familiar with the results said.
Bigger Loss
The average analyst estimate is for a North American pretax
loss of more than $400 million, Chris Ceraso, a New York-based
Credit Suisse Group analyst, wrote in a Jan. 31 report. He
predicted $575 million.
Applied Materials, the world;s biggest maker of
semiconductor-production machines, slipped 11 cents to $18.38 in
Germany. The maker of chip-production machines may report first-
quarter profit, before some items, of 20 cents a share after the
close of U.S. exchanges, according to the average of 20 analysts;
estimates compiled by Bloomberg.
AIG lost 2 cents to $44.72 in Germany. Lehman Brothers
lowered its recommendation on the stock to “equal weight;; from
“overweight;; and slashed its share-price estimate 37 percent to
$45 apiece.
“We anticipate further writedowns;; from credit-default
swaps and so-called structured products, Jay Gelb, a New York-
based analyst, wrote in a report to investors today.
More Writedowns
Citigroup Inc., the biggest U.S. bank, fell 6 cents to
$25.75 in Germany.
As prices of high-yield debt continue to decline this year,
Citigroup and other top investment banks may need to write down
at least $15.1 billion on unsold loans and bonds for leveraged
buyouts in their first quarter earnings, Bank of America Corp.
analysts, led by New York-based Jeffrey Rosenberg, wrote in a
research report dated yesterday.
The value of high-risk, high-yield loans fell to a record
low yesterday amid speculation banks will have to sell assets
included in collateralized loan obligations, according to traders
of credit-default swaps.
“The subprime crisis won;t be over that quickly,;; said
Achim Matzke, an equity strategist at Commerzbank AG in
Frankfurt, in a Bloomberg Television interview. “There will be
more bad news.;;
To contact the reporter on this story:
Andreas Hippin in Frankfurt at
