US stocks: Wall Street set to open lower on banks, tech

Last Updated: Mon, Apr 06, 2009 13:30 hrs

New York: US stocks futures pointed to a lower open on Monday, as bank shares fell after an analyst initiated coverage on several large banks with an "underperform" or "sell" rating, sapping recent investor optimism on the financial sector.

Banks erased early gains after veteran banking analyst Mike Mayo of CLSA started coverage on several large banks, citing increased problem loans and the government's ability to resolve them, according to

Tech shares lost ground after broker downgrades and a potential merger between IBM Corp and Sun Microsystems collapsed.

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"Cisco off, Sun off and then this negative banking news, said Frank Lesh a futures analyst and broker at FuturePath Trading LLC in Chicago.

"Some of that optimism from the end of last week ended quickly,"

The Select Sector SPDR Financial ETF fell 2.9 per cent to $9.41 while Citigroup slid 3.9 per cent to $2.74 and Bank of America was down 4.3 per cent to $7.28 in premarket trade.

S&P 500 futures fell 8.30 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 slid 74 points, and Nasdaq 100 futures shed 16.25 points.

US stocks capped off a 4-week winning streak on Friday, with the Dow marking its best performance on a per centage basis over that period since 1933.

Cisco shares slid 2.5 per cent to $17.70 in premarket trade after Goldman Sachs cut the stock to a "neutral" rating and removed it from the firm's "Conviction Buy" list.

Shares of Sun Microsystems Inc tumbled nearly 22 per cent to $6.66 in premarket trade after a source with knowledge of the matter told Reuters that talks with IBM to acquire its smaller rival broke down. IBM slid 1.3 per cent to $100.92.

Economic data scheduled for Monday includes the Conference Board's Employment index for March and the Chicago Fed Midwest manufacturing index.

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Earnings season is slated to begin tomorrow when Dow component Alcoa reports its first-quarter results.

The blended growth rate, which combines actual numbers for companies that have reported and estimates for companies yet to report stands at negative 36.6 per cent for the S&P 500, according to data compiled by Thomson Reuters.

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