If last week gave investors the feeling that perhaps the financial crisis and economic slowdown gripping the United States, and much of the world, wasn't as bad as expected, this week is looking like the arrival of a cold bucket of water.
U.S. stock index futures declined with about an hour before trading begins, suggesting they will open lower. Futures for the Dow Jones industrial average fell 99 points, to 11,366. Futures for the broader S&P 500 fell 11 points, to 1251.
In Europe, the U.K.'s FTSE 100 fell 1.6 per cent and Germany's DAX index fell 1 per cent in afternoon trading. In Asia, Japan's Nikkei 225 rose 3 per cent in overnight trading.
Disappointing earnings and forecasts for key U.S. companies were the source of the newfound pessimism, which comes after mostly impressive gains in recent trading sessions that followed relatively upbeat earnings from several financial firms.
This time, Wachovia Corp. reported an $8.9-billion (U.S.) loss and cut its dividend by 87 per cent, clearly a victim of the ongoing credit crisis that many investors hope is dwindling in intensity. Its shares fell 10 per cent in premarket trading.
Apple Inc. announced that its fourth-quarter profit will be $1 a share, far below analyst expectations for $1.24 a share, thanks in part to a slowing economy. As well, the iPhone maker expects revenue will be $7.8-billion, versus expectations for $8.3-billion. The shares fell 10 per cent in premarket trading, proving that having a hot-hot-hot product might not be enough to interest investors.
American Express Co. reported that consumer defaults are on the rise, with second quarter profit down 37 per cent from last year. And finally, Texas Instruments Inc. forecast third quarter earnings of just 41 cents a share, versus expectations for earnings of 51 cents.
The only good news came from Canadian Pacific Railway Ltd., which reported that its second quarter earnings were $154.9-million (Canadian) or $1 a share - down sharply from last year thanks to surging fuel costs and a rising loonie, but ahead of expectations for earnings of 97 cents a share.