Stocks pull back at open
Wall Street retreats after Dow's more than 400-point rally, with the focus switching to corporate earnings.
NEW YORK†(CNNMoney.com) -- Stocks slipped Tuesday morning, as investors backtracked after the previous session's big 413-point rally for the Dow Jones industrial average.
Lending rates improved, giving the market some reassurance that the government's attempts to stabilize the financial markets are starting to have an impact.
Stocks that had led the previous session's rally paced the early retreat Tuesday, including oil services firms, financials and technology. Meanwhile, the focus turned to the third-quarter corporate reporting period, which heats up this week.
British and French stocks were higher in morning trading, buoyed by a plan by the French government to inject $14 billion more into banks and Wall Street's rally. But British stocks lost their momentum and slipped at midday. Shares in Japan gained for a third straight session.
The dollar gained versus the euro and the British pound, but fell against the yen.
Corporate results: This week is thick with quarterly results, with some 140 companies from the S&P 500 reporting.
Caterpillar (CAT, Fortune 500), maker of earth-movers, reported a dip in third-quarter earnings to $1.39 per share, or $868 million, compared to the same period last year, when the company reported $1.40 per share, or $927 million. That fell short of the $1.41 per share projected by a consensus of analysts from Thomson FirstCall. Sales jumped 13% to nearly $13 billion. The company blamed the "recessionary" market of North America.
Technology company 3M (MMM, Fortune 500) reported a 10% gain in third-quarter earnings to $1.41 per share or $991 million, compared to the same period last year. That beat the $1.38 per share projected by a consensus of analysts from Thomson FirstCall. Sales were up 6% to $6.6 billion.
National City (NCC, Fortune 500) reported a net loss of $729 million as the regional bank struggled to build loan loss reserves. While this is much worse than its $19 million net loss in the third quarter of 2007, it's an improvement from the abysmal $1.8 billion loss in the second quarter of 2008.
DuPont (DD, Fortune 500) reported that third-quarter earnings plunged to 40 cents per share, compared to 56 cents during the same period last year. The chemical giant blamed disruption in Texas-based manufacturing because of Hurricane Ike, as well as economic slowness. Also, DuPont lowered its full-year 2008 guidance to a range of $3.25 to $3.30 per share, compared to its prior guidance of $3.45 to $3.55.
Pfizer (PFE, Fortune 500) reported that sales slipped slightly in the third quarter, but still totaled nearly $12 billion, while reported diluted earnings more than tripled to 34 cents from 11 cents in the same period last year. Adjusted earnings were 62 cents per share, beating the 60 cents projected by a consensus of analysts from Thomson FirstCall .The improvement stems from the drug giant's after-tax charges last year because of its decision to dump Exubera, the inhalable insulin that failed to catch on with diabetics.
Schering-Plough (SGP, Fortune 500) reported a profit plunge of 23% to $551 million, or 34 cents per share, during the third quarter, compared to $713 million, or 45 cents per share, during the same period last year. The drug maker still managed to beat expectations of 31 cents per share from Thomson FirstCall's analyst consensus, saying sales were driven by the arthritis drug Remicade.
Economy: At 10 a.m. ET, the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, will lead a hearing on the need for regulatory restructuring of the financial industry.
Oil prices dropped $1.67 a barrel to $72.58 in electronic trading. To try and stop the decline in pricing, OPEC is considering a cut in production by 1 million barrels per day.
Monday's session. U.S. stocks shot higher Monday, buoyed by signs that the credit market is starting to thaw and talk of a second stimulus plan in the United States. The blue-chip Dow advanced 413 points, or 4.7%, to jump back above the 9,000 level.
Investors welcomed a fall in key lending rates, which signaled that the worldwide effort to loosen up the credit markets is starting to work. Federal Reserve chief Ben Bernanke also said Congress should consider another stimulus plan during testimony before a House panel.