U.S. Stocks Seen Lower As Subprime Woes Resurface
NEW YORK (MarketWatch) -- U.S. stocks were poised for a lower open on Tuesday, after homebuilder Lennar Corp. scrapped its 2007 earnings guidance and warned that the distress in the subprime mortgage market is hurting it.
Investors were also keeping a cautious tone ahead of the latest reading on consumer confidence, to be released at 10 a.m. The Conference Board's index is expected to show confidence declined in March as gasoline prices rose.
Futures for the Dow Jones Industrial Average dipped 13 points to 12,520.
Among blue chips, Wal-Mart Stores may be in focus. The retail giant is reportedly studying whether its Asda unit in Britain would be allowed to make a bid for J Sainsbury, a rival U.K. supermarket operator worth around $20 billion, according to a report in the Independent newspaper.
Futures for the S&P 500 index fell 1.1 points to 1,444, while those for the Nasdaq 100 eased 1.75 points to 1,816.
The homebuilding sector will be in renewed focus after Lennar said first-quarter earnings plunged 73% from the year earlier, which was expected by analysts, and withdrew its 2007 earnings guidance.
"The typically stronger spring selling season has not yet materialized. These soft market conditions have been exacerbated by the well-publicized problems in the subprime lending market," said CEO Stuart Miller.
The report from Lennar follow Monday's news that new home sales unexpectedly fell 3.9% in February, while sales for the previous three months were revised lower by a huge 172,000. Prices fell 0.3% year on year and the supply of homes jumped to a new high.
Banking regulators will again be grilled Tuesday by a House subcommittee on what went wrong in their oversight of the subprime sector.
Oil in focus
Investors also monitored crude oil prices, which have again breached the $60-barrel level recently.
In early action, however, crude-oil futures fell back 41 cents to $62.50. News that 15 U.K. naval personnel are still being held by oil exporter Iran limited losses.
The U.S. dollar was slightly weaker against the euro after better-than-forecast German business climate figures, while it rose against the yen.
Cleveland Fed President Sandra Pianalto is due to speak in Prague about currencies.
Gold futures rose $1.10 to $665 an ounce.
Corporate news
Bristol-Myers Squibb rose 0.7% before the open after a report that Sanofi-Aventis is again considering making a bid for its partner on the Plavix blood-thinning drug. The Times of London reported that Sanofi's chairman and chief executive are split on whether a bid should be launched, but the pro-deal chairman is reported to have greater sway on the board.
DaimlerChrysler jumped 3% in electronic trade. The automaker said it was pushing back its first-quarter results release date to May 15 from April 26, blaming the delay on the time needed to switch to IFRS accounting from U.S. GAAP accounting. Separately, the Handelsblatt newspaper reported that the possible sale of Chrysler could occur within just a few weeks time, with the first bids due by week's end.
Phillips Van Heusen dropped 3% after the New York clothing manufacturer forecast full-year 2007 earnings of $3 to $3.06 a share, while analysts polled by Thomson Financial were looking for a profit of $3.06. It also said it sees first-quarter earnings of 85 cents a share, matching the consensus estimate.
Diagnostics firm Cephid rose 7% in pre-open trade on positive comments from television host Jim Cramer.
By Nick Godt