Wall Street set to open lower

US stocks were mixed on Wednesday morning as lower than expected inflation figures and good news from Procter & Gamble balanced fears about demand in the technology sector.

Procter & Gamble gave consumer companies a much needed boost amid falling retail sales numbers and and negative words on the economy from Mike Duke, Wal-Mart’s chief executive, after the company raised its dividend for the 52nd straight year. It lifted its quarterly shareholder payout 10 per cent to $0.44, and its shares picked up 2.5 per cent to $48.44.

This helped the consumer staples sector perform better than any other on the benchmark S&P 500 index, despite Mr Duke saying there would be no quick end to the recession.

But Intel fuelled concerns about consumer demand in the technology sector after it refused to give formal guidance for its second quarter earnings despite reporting better results than expected.

The company said it had made $0.11 of net profit per share, compared to expectations of just $0.03. But visibility remained low, and the company would only say that for internal purposes, it expected revenues for the second quarter to be roughly in line with those seen during the first three months of the year.

The shares fell on the lack of clarity, losing 4.7 per cent to $15.26. Rival chip maker National Semiconductor also fell, dropping ?3 per cent to $11.88, while Microsoft gave up 2.8 per cent to $18.81.

Nick Kalivas, an analyst at MF Global, warned the market could have priced in better earnings than analyst had predicted, which could mean equity falls even after strong results. “Intel provided good results compared to printed expectations, but the market reacted poorly to margin guidance. The aftermarket selling may hint that the trade is too long into earnings,” he wrote.

CPI numbers showed inflation was lower than expected, with prices for March falling 0.1 per cent, and gaining 0.2 per cent excluding food and energy. But this failed to spark a rally in equities, with investors more concerned about the lack of demand for US goods and services.

Concern over future revenues for technology companies led the Nasdaq lower, falling 0.6 per cent to 1,615.51 points. But the S&P rose 0.1 per cent to 842.52 points, and the Dow Jones Industrial Average gained 0.3 per cent to 7,942.56 points.

Mortgage applications fell for the week ending April 10 for the first time in over a month, putting some pressure on financial stocks, which have fallen recently as data have shaken confidence that the country will soon see the beginnings of an economic recovery.

Citigroup, which was one of the few banks to find gains on Tuesday, fell back 4.5 per cent to $3.83 in early trade, while Bank of America lost 5.5 per cent to $9.53.

Credit card companies added to the gloom in financial stocks after Capital One said that customer defaults rose in March along with the unemployment rate. Capital One lost 4.2 per cent to $16.36, while Discover gave up 2.8 per cent to $8.45 and Mastercard retreated 2.9 per cent to $161.30.

As earnings season began to hit full speed, there was negative news from the bigger companies reporting their first quarter results.

Peabody Energy disappointed the market despite reporting increased sales and revenue by making only $0.50 per share in earnings compared to consensus estimates of $0.95. The company also deferred providing full-year targets, with future demand still unclear. Its shares fell 11.7 per cent to $25.92.

Abbott Laboratories also fell despite reporting increased profits. The company made $0.73 per share in earnings compared to estimates of $0.70, but this was fuelled by one-off gains, and with global sales declining, including those of its top-selling drug Humira, its shares lost 3.7 per cent to $43.04.

General Motors continued to pick up ground, however, after Bloomberg reported encouraging signs of agreement between bondholders and the United Auto Workers union over retiree healthcare plans as the company seeks to restructure. Its shares gained 5.6 per cent to $1.88.

Allegheny Energy was the biggest riser on the S&P, after Barclays raised the utility company to “overweight” from “equal weight”, saying the company may benefit from an auction for Pennsylvania power prices. The company’s shares picked up 6.6 per cent to $25.97.

European stocks were down early on Wall Street, driven lower by poor results from Swiss bank UBS. The FTSE Eurofirst 300 index was 0.4 per cent lower at 786.71 points. Asian equity markets closed mainly down, with the FTSE Asia-Pacific index giving up 0.4 per cent to 168.08 points.

Bond yields were little changed, with the yield on the two-year Treasury note gaining 2 basis point to 0.867 per cent and that on the 10-year Treasury note unchanged at 2.783 per cent.

The dollar was higher against major currencies early in New York, rising 0.1 per cent against the euro to $1.3250, and 0.2 per cent on the yen to Y99.03.

Gold was trading $0.42 higher at $891.09 per troy ounce.

Oil prices were also up, and back abovfe the $50 mark. US crude prices were $0.65 higher at $50.06 a barrel.