Stock Futures Tumble on Apple, American Express Declines

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The New York Sun

American stock futures tumbled after the close of American exchanges, dragged down by lower-than-estimated earnings at American Express Co. and disappointing forecasts at Apple Inc. Treasury yields and the dollar also dropped.

American Express, the biggest American credit card company by purchases, fell 11% from its 4 p.m. close after second-quarter profit trailed analysts’ estimates by 32%. Apple, maker of the iPod music player, lost 6.5% after saying sales and earnings will fall short of projections. SandDisk Corp. tumbled 12% after reporting a loss.

“This whole earnings season will be somewhat choppy,” a manager of $1.4 billion at Hodges Capital Management Inc. in Dallas, Eric Marshall, said. “The technology companies that are more tied to making components or semiconductors or cell phones, those are more likely to be impacted by weakness in consumer spending.”

The Financial Select Sector SPDR, an exchange-traded fund tracking 88 bank and brokerage stocks, lost 2.2% after American Express said consumer defaults increased. An index of financial companies ended a three-day advance in regular trading, dropping 0.9% to bring their 2008 decline to 29%.

Futures on the Nasdaq 100 fell to a three-month low following forecasts from Apple, SanDisk Corp., and Texas Instruments. Information technology companies in the S&P 500 are projected to report a 12.35 gain in second-quarter profits, the most among 10 industries, according to data compiled by Bloomberg.

American Express retreated $4.39 to $36.51 after it said second-quarter profit fell 37% on worse-than-expected consumer defaults. American Express, Capital One Financial Corp., and Discover Financial Services shares have dropped by more than a third in the past year amid concern the lenders underestimated the depth of the American slowdown.

Capital One, the credit-card company that set aside $1.9 billion in the fourth-quarter for loan losses, slipped 6.1% to $39.50. Discover, the credit card company spun off by Morgan Stanley, declined 6.2% to $14.25.

Apple lost $2.16 to $15.77. The company predicted a fourth-quarter profit of $1 a share and sales of $7.8 billion, below the $1.24 a share in profit and $8.3 billion in sales anticipated by analysts in a Bloomberg survey.

“Apple is a stock that everyone watches,” an analyst at Al Frank Asset Management in Laguna Beach, Calif., Mark Mowrey, said. “When you’ve got valuations like this, any slight disappointment is going to wreck the multiples that give rise to these kind of valuations.”


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