US futures drop on Intel outlook

US stock index futures fell on Wednesday as Intel joined the ranks of tech companies to cut their outlooks in a sign of how tepid economic conditions worldwide are hurting revenue.

Financials will also be in focus following results from Bank of America Corp, which swung to a second-quarter profit following a massive mortgage-related charge a year earlier. The Dow component rose 1.6 percent to $8.05 in premarket trading, following similar rallies by JPMorgan Chase, Citigroup Inc and Goldman Sachs.

Intel Corp late Tuesday cut its full-year revenue outlook and said consumer spending in Europe and the United States was softer than previously thought.

“We're clearly seeing softness in company revenue because of Europe and the global slowdown, and that's a concern,” said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.

“We're seeing those fears spread across industries, but Bank of America is another example of financials being surprisingly strong. That could be a sector that shines because expectations are so low.”

Among tech stocks, Advanced Micro Devices and Applied Materials also cut their guidance in recent weeks, contributing to month-to-date losses of more than 2 percent in the S&P information technology index. The group is considered a proxy for business spending, and the weak views in the sector could have broader implications.

S&P 500 futures fell 4.3 points and were above 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 fell 37 points and Nasdaq 100 futures lost 6.75 points.

Still, earnings reports at large continue to be solid. With 7 percent of S&P 500 companies having reported, 65 percent have beaten profit expectations, according to the latest Thomson Reuters data. Only 15 percent have missed.

A number of key reports will be released on Wednesday, including those of American Express Co and International Business Machines Corp. Bank of New York Mellon and PNC Financial reported earlier on Wednesday.

Investors will also be looking to Ben Bernanke, the US Federal Reserve chairman, who will deliver the semi-annual “Monetary Policy Report to the Congress” before the House Financial Services Committee.

Bernanke testified before a Senate committee on Tuesday, and while he didn't give any specifics over what the central bank might do to accelerate growth amid signs of weakness, he left the door open to more stimulus if it became clear unemployment was not falling or if deflation risks mounted.

In company news, Vivus Inc surged 18 percent to $31.25 in premarket trading after the Food and Drug Administration approved the company's obesity drug.

June housing starts will be released at 8:30 a.m. (14:30 SA time) and are seen edging higher from the previous month.

Wall Street rose on Tuesday, lifted by strong results from Goldman Sachs and Coca-Cola Co. Still, the S&P has posted losses in seven of the last nine sessions, falling about 1 percent. - Reuters