By Saumya Vaishampayan
U.S. stock futures declined Tuesday, dragged down by
disappointing quarterly results from several blue-chip companies,
including Microsoft Corp. and Procter & Gamble Co.
Dow Jones Industrial Average futures dropped 223 points, or
1.3%, to 17391. S&P 500 futures declined 20 points, or 1%, to
2034, and Nasdaq-100 futures fell 51 points, or 1.2%, to 4219.
Changes in stock futures don't always accurately predict moves in
the stock market after the opening bell.
Several blue-chip companies offered weak outlooks due to the
strength of the U.S. dollar.
Microsoft shares fell 7.6% in premarket trading, notching the
biggest decline on the Dow industrials. Microsoft set its financial
forecast for the fiscal year, which ends in June, below Wall Street
estimates, citing the strong U.S. dollar. Sales of its software
sold to corporations rose 4.6% from a year earlier, a bit below
analyst expectations.
United Technologies Corp. cut its 2015 sales and profit
forecasts, blaming the strength of the dollar. The company says 62%
of its sales are overseas, leaving it very exposed to a sudden
change in the value of the U.S. dollar. Shares fell 2.3%
premarket.
Procter & Gamble said Tuesday that its efforts to slim down
and speed sales growth by shedding brands are being overshadowed by
"unprecedented currency devaluations." P&G said it expects
currency volatility to reduce its 2015 sales by 5% and profit by
12%. Shares fell 2.7% in premarket trading.
The U.S. dollar has surged against its rivals in recent months,
one of the factors driving the current earnings season's tepid
outlook. The downdraft in oil prices and weak economic activity
overseas are also at play. Going into fourth-quarter earnings
season, analysts polled by FactSet had expected earnings to rise
1.1% from a year earlier, which would mark the slowest quarterly
pace of growth since the third quarter of 2012. Including 102
companies that have reported, the S&P 500 is on track to see
earnings inch up 0.1% from a year earlier.
"We're already hearing from companies that the strength of the
dollar is beginning to be a concern," said Quincy Krosby, market
strategist at Prudential Financial, adding that many investors are
waiting for Apple Inc.'s results after the bell.
"It won't be right now, but you want to get a sense from the
guidance if these companies believe that demand is beginning to
pick up outside of the U.S.," she added.
Declines in European stocks also added to the negative tone.
Nervousness about a potential showdown between Greece's new
government and its international creditors continued to grip Greek
financial markets Tuesday, with stocks and bonds extending their
postelection losses. The Stoxx Europe 600 fell 0.8%.
Assets considered havens rose Tuesday. Gold futures added 0.3%
to $1283.00 an ounce. The yield on the 10-year Treasury note fell
to 1.797% from 1.830% on Monday. Yields fall as prices rise.
In other markets, crude-oil futures lose 0.2% to $45.07 a
barrel.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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