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Market set for flat open on Wachovia, retail

14/04/2008 - 14:12

By Jennifer Coogan

NEW YORK (Reuters) - U.S. stocks headed for a flat open on Monday after a surprise gain in March retail sales helped calm nerves on Wall Street rattled by an unexpected quarterly loss by Wachovia Corp , the fourth-largest U.S. bank.

Wachovia said it would cut its dividend and raise capital of $7 billion after being hurt by credit conditions that have hammered financial-sector earnings worldwide. For details, see

. Its shares were down nearly 10 percent to $25.11 before the opening bell.

Adding to earnings concerns, Wall Street analysts expect Standard & Poor's 500 companies to show a 13.8 percent decline in quarterly profits, steeper than a previous estimate of an 11.8 percent drop, according to Reuters Estimates.

But stock index futures pared losses when government data showed an unexpected rise in retail sales last month.

Retail sales "were a bit better than expected. I can't say the worst is over for the environment we're in, but it gives you a little bit of hope," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut. "And people are expecting the worst from earnings and economic data."

S&P 500 futures were down 3.6 points, slightly below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures fell 27 points, and Nasdaq 100 futures dropped 6.5 points.

Retail sales unexpectedly rose 0.2 percent in March, pushed up by a jump in gasoline sales, a government report showed.

Movie rental chain Blockbuster Inc said on Monday that it had offered to buy struggling electronics retailer Circuit City Stores Inc in an all-cash offer of between $6 and $8 per share, sending Circuit City shares up to $6.13 from $3.90. Blockbuster shares were down 11.5 percent at $2.77.

In other earnings news, shares of Eaton Corp jumped nearly 6 percent to $83.50 after the manufacturer reported higher quarterly profit. Building maintenance supply company W.W. Grainger Inc posted a 12 percent rise in first-quarter profit, beating analysts' forecasts.

Stocks tumbled on Friday on surprisingly weak earnings from General Electric . Other companies that have reported disappointing results this quarter include aluminum company Alcoa , parcel delivery service United Parcel Service

and department store chain J.C. Penney .

(Editing by Kenneth Barry)


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