Stocks headed for lower open after weaker revenues from Goldman, IBM disappoint

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Stocks headed lower as Goldman, IBM revenues slip

NEW YORK — Stocks are headed for a lower opening after revenues from Goldman Sachs and IBM came in lower than investors expected.

The miss from the leading investment bank early Tuesday was the latest sign of weakness in revenues in this corporate earnings season. Late Monday, IBM reported revenues that were also lower than expected.

A downbeat report on the housing sector didn’t help the mood in the market. The Commerce Department said home construction fell last month to the lowest level since October. However the decline was mitigated by a 2.1 percent rise in building permit applications, an indicator of future activity.

Ahead of the opening bell, Dow Jones industrial average futures fell 75, or 0.8 percent, to 9,985. Standard & Poor’s 500 index futures dropped 9, or 0.8 percent, to 1,055, while Nasdaq 100 index futures fell 16, or 0.9 percent, to 1,790.

The results from Goldman Sachs reinforced a concern among investors that revenues are coming in unusually weak, a sign that the economic recovery isn’t as strong as investors had hoped. Like IBM, Goldman also reported per-share earnings that beat estimates, but the market has been keying in on whether companies are delivering sustainable growth in revenues.

IBM’s shares were off 4.6 percent in pre-market trading, while Goldman’s were down 2 percent, helping to drag other shares lower as well.

Stocks have been in a funk since late April as an increasingly large number of dark signs emerge about the broader economy. Investors have been hoping to find in second-quarter earnings results signals that the overall U.S. economy may be doing better than the recently weak economic indicators have indicated.

For some companies, even matching expectations for revenues isn’t enough. Late Monday Texas Instruments Inc. reported revenues that came in line with estimates, but investors were dispapointed that the company didn’t report results as robust as come of its competitors. Its shares were down 5 percent in pre-market trading.

IBM’s revenue came in short of analysts’ forecasts because of a drop in the value of service contracts. It also said sluggish growth in Europe was affecting its revenue. Texas Instruments’ revenue rose, but expectations were high following a blowout quarter from fellow chipmaker Intel Corp.

Apple Inc. and Yahoo Inc. will also report results after the closing bell.

Goldman Sachs’ results are being closely watched since investors are concerned about how much banks will be restricted from trading by new financial regulation reform. The bank’s net income fell 83 percent to $453 million on lower trading revenue and a charge to settle civil fraud charges brought by the government.

Investors initially dumped stocks following a report Monday showing homebuilders are pessimistic about future expansion. However, housing reports have largely been weak and expectations remain low for the sector that helped push the economy into recession.

Bond prices rose as investors opted for the perceived safety of government bonds. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.95 percent from 2.96 percent late Monday.

Overseas, Britain’s FTSE 100 fell 0.4 percent, Germany’s DAX index fell 1 percent, and France’s CAC-40 fell 1.2 percent. Japan’s Nikkei stock average fell 1.2 percent.