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Pre-Market: Stocks Lower Ahead of Facebook Earnings, Fed Statement


Facebook might confirm or deny that young users are abandoning it.

Stocks turned lower this morning before the Federal Reserve announces whether it will ratchet down its monetary stimulus further and Facebook Inc (NASDAQ:FB) reports its quarterly profits.

Ahead of the opening bell, futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) were down 0.31% at 15,826. S&P 500 (INDEXSP:.INX) futures fell 0.30% to 1,783.00 and Nasdaq (INDEXNASDAQ:.IXIC) futures declined by 0.29% to 3,491.00.

Facebook may get the better of the naysayers that predict its decline. The social network is likely to post a 65% year-over-year rise in profits for the holiday quarter. Net profit is likely to weight in at $706.06 million, or $0.27 per share when adjusted for one-time events. As advertisers rushed to the platform to target holiday shoppers, revenue is projected to be $2.32 billion.

The earnings call at 5 p.m. will be a major focus. The company might respond to the chorus of reports that young users are leaving Facebook, including a Princeton study that predicts that it will lose 80% of its users by 2017. Even the president of the United States is aware that it's losing its cool. Investors will be anxious to hear whether these reports hold water, especially after Facebook began placing video ads in users News Feeds. Yesterday, shares of the company rose 3%, and they stayed flat in pre-market trading.

Shares of The Boeing Company (NYSE:BA) fell 1.9% this morning after the aerospace company reported earnings and gave guidance for 2014 that fell short of expectations. For the last quarter, earnings per share rose 29% to $1.88. Revenue rose to $23.79 from $22.30 a year earlier. Investors negatively reacted to management's forecast for this year, however. Boeing expects to earn between $7 and $7.20 per share in 2014. Analysts had expected it to earn $7.57 per share.

AT&T (NYSE:T) shares dropped 2.2% this morning after it reported slower-than-expected subscriber growth. Last quarter, the number-two US wireless carrier gained 566,000 subscribers, fewer than Verizon Wireless (NYSE:VZ), which had a net gain of 1.6 million and T-Mobile US (NASDAQ:TMUS) which had 869,000. The latter rival pays AT&T customers to switch, and AT&T responded in kind. Wall Street had expected 636,000 new AT&T customers. Earnings per share came in at $1.31, up from a loss of $0.68 per share last year when it was harmed by actuarial charges related to Hurricane Sandy.

Today, the most awaited news will come from the Federal Open Markets Committee statement at 2 p.m. In Ben Bernanke's last major press conference as Chairman of the Federal Reserve, he is widely expected to announce more incremental reductions in the Fed's monthly asset purchase program. December 2013's disappointing jobs report, which many see as an anomaly, could put the brakes on the taper, however.

Last night, President Obama said in his State of the Union address that he will circumvent Congress if necessary to raise the minimum wage for federal workers and create a government-run retirement savings program.

Overnight, emerging markets currencies recovered slightly from their recent rout. The central banks of both Turkey and South Africa both announced major rate hikes to stem the decline of their currencies. Turkey increased its overnight lending rate to 12% from 7.75% and the overnight borrowing rate to 8% from 3.5%. South Africa raised its repo rate by 50 basis points to 5.5%. The central bank said that it raised rates because it expects pressures on the rand to intensify.

Twitter: @vincent_trivett
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