July-28-09 Stock Market Early Opening

Stock Futures Point to Lower Wall Street
U.S. stock futures dropped after a two-week rally pushed the Standard & Poor’s 500 Index to its most expensive level relative to earnings since September and companies from Office Depot Inc. to Coach Inc. posted worse- than-estimated results.

Coach, the biggest U.S. maker of luxury leather handbags, fell 7.1 percent as sales trailed estimates.
Wells Fargo & Co., Citigroup Inc. and Bank of America Corp. declined after Deutsche Bank AG, Germany’s biggest lender, set aside more money for bad loans than analysts estimated.

Office Depot plunged 13 percent to $4.65. It reported a second-quarter loss excluding some items of 22 cents a share. The average estimate of analysts was a loss of 12 cents.

Coach retreated 7.1 percent to $26.40. The retailer said sales declined 0.5 percent to $777.7 million, missing analysts’ estimates, as mounting job losses and declining home values discourage shoppers from purchasing non-necessities.

Deutsche Bank sank 8.6 percent to $67.51. The Frankfurt- based lender said it set aside 1 billion euros ($1.4 billion) for risky loans in the second quarter, exceeding the 634 million euro estimate of analysts. Deutsche Bank also predicted a further increase in private and corporate insolvencies.

Banks Decline

Wells Fargo fell 0.7 percent to $24.06. Citigroup lost 1.1 percent to $2.66.

Bank of America dropped 0.4 percent to $13.04. The Wall Street Journal said the lender plans to close about 10 percent of its 6,100 branches as more people shift to online and mobile banking.

Amgen Inc., the largest biotechnology company, rose 2.9 percent to $62.53 after earnings beat analysts’ predictions as it cut research costs and increased sales of its arthritis drug Enbrel. Amgen also raised its full-year earnings forecast.

Sprint Nextel Corp. and International Business Machines Corp. announced takeovers today. Sprint, the third-largest U.S. wireless carrier, said it will buy Virgin Mobile USA Inc. for $483 million, or $5.50 a share. IBM, the world’s biggest computer-services provider, said it will purchase SPSS Inc. for about $1.2 billion, or $50 a share, to gain analytics software.

Almost 76 percent of S&P 500 companies that have reported second-quarter results topped analysts’ estimates. That would be the highest rate ever for a full quarter, Bloomberg data going back to 1993 show. Per-share profits have dropped 23 percent on average, according to Bloomberg data.

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