11:30AM Stock markets traded down. Blasts in Mumbai weighed.
The major averages moved firmly into negative territory as disappointing earnings news from Alcoa and Lucent contributed to the market weakness. Dow component Alcoa (AA: chart) dropped 4.8% as it reported weaker-than-expected Q2 revenues. Shares of Lucent (LU: chart) declined 4.3% after the company issued a Q3 sales warning which also raised concerns about the strength of earnings. The news contributed to significant weakness in the networking sector. The Amex Networking Index fell down 2%, while Alcatel (ALA: chart), which agreed to merge with Lucent, dropped 5.5%. The airline sector stood out as one of the market''s worst performances as Merrill Lynch downgraded Continental (CAL: chart), AMR (AMR: chart), and U.S. Airways (LCC: chart) to Neutral from Buy, citing concerns about valuations following the recent strength in the sector. The Amex Airline Index dropped 4.1%.

Housing stocks also came under pressure, led by Champion Enterprises (CHB: chart), with the homebuilder down 5.4%. The financial, internet, and retail sectors also showed weakness, while oil service stocks bucked the downtrend, supported by the price of oil. Some negative sentiment was also generated by news of a series of explosions that hit commuter trains in Mumbai, India. The blasts occurred during rush hour in the financial hub and have reportedly killed up to 100 people. In late morning trading, the Dow dropped 63.71, or 0.57%. The S&P 500 was down 6.16, or 0.49%, and the Nasdaq composite index lost 18.31, or 0.86%. Bonds rallied, with the yield on the 10-year Treasury note slipping to 5.09% from 5.13% late Monday.


10:30AM Auto and steel shares push the Sensex down in volatile trading.
The Sensex in India ended lower by 69.95 points, 0.65%, on 10,614.35. The turnover on BSE was $500 million or (Rs 2,404 crore), up from the turnover on Monday of Rs 2,242 crore. The market-breadth was negative on BSE, as 1,169 stocks advanced, 1,203 declined and 74 stocks were unchanged.

Market trading was dominated by earnings expectations and news. Hero Honda fell on lower than expected earnings. However, banking stocks traded at a higher than normal volume. UTI Bank and HDFC Bank are expected to release earnings this week. Followed by State Bank of India and ICICI Bank earnings next week. UTI and HDFC are expected to report at least 15% rise in earnings but State Bank of India is expected to report 18% decline.

Top decliners in trading were Hero Honda, Tata Motors, Tata Steel, Hindalco and HLL. Hero Honda led the decliners, plunging 6.50% to Rs 717.10. The stock plummeted soon after it reported disappointing results. The company repoted revenue rise of 20% and earnings growth of 16% but indicated that operating margins had declined. The company also guided lower sales in the current quarter. Industry analysts feared that the company had lost market share.

Other auto stocks also declined. Tata Motors dipped 3% to Rs 759, Maruti Udyog lost 1.6% to Rs 792, Mahindra & Mahindra slipped 1.9% to Rs 603, Ashok Leyland lost 1.5% to Rs 36.20, and Eicher Motor was off 1.6% to Rs 267.

Tata Steel declined 2.56% to Rs 513.10 on a volume of 2.67 million shares while large-cap HLL sank 2.16% to Rs 235 on heavy trading volume of 2.4 million. Hindalco was down 2.20% to Rs 168.30. HDFC Bank shed 2.04% to Rs 763 while HDFC advanced 0.20% to Rs 1,200. IT large-cap Infosys also shed 1.10% to Rs 3,155.

Top advancers on Tuesday were pharma stock Cipla, Gujarat Ambuja, Grasim, Satyam and Wipro. Pharma stocks Dr Reddy’s Lab advanced 1% to Rs 1,327 and Cipla gained 3.43% to Rs 221.35 on buying momentum. Cement companies advanced, as ACC gained 0.83% to Rs 817 and Gujarat Ambuja Cement added 2.13% to Rs 105.4 after mid-afternoon session of trade on expectations of firm prices.

Reliance Industries advanced 0.60%, to Rs 1,049.30. Reports circulate that the company will launch 3 news channels by the end of the year and is in talks with BBC and a Delhi-based television software company for an equity alliance. Reliance Industries was also the top-traded stock on BSE with a turnover of Rs 166.47 crore or $40 million.


9:45AM Stocks opened lower on news from Alcoa and Lucent.
U.S. stocks started the trading session in the negative after a disappointing revenue report by Dow component Alcoa Inc. (AA: chart) and a profit warning by telecommunications-equipment maker Lucent Technologies Inc. (LU: chart) raised concerns about the strength of corporate earnings. In early trading, the airline sector posted considerable weakness, with AMR (AMR: chart) and Continental (CAL: chart) turning in two of the sector''s worst performances. The Amex Airline Index dropped 3.2%. Disappointing news from Lucent helped telecommunication and networking stocks move to the downside as the company forecast weaker-than-expected Q3 results. At the same time, the energy and gold sectors showed some strength as the prices of oil and gold moved higher in early trading. In early trading, the Dow dropped 16.81, or 0.15%. The S&P 500 was down 1.14, or 0.09%, and the Nasdaq composite index lost 6.01, or 0.28%. Bonds edged higher, with the yield on the 10-year Treasury note slipping to 5.12% from 5.13% late Monday.



9:00AM Stock futures pointed to a lower start.
U.S. stock futures posted weakness early Tuesday morning, with the Nasdaq standing out as the worst performer. On Monday market averages finished mixed as the Dow moved moderately higher, while weaker technology on profit warnings from EMC (EMC: chart) and Advanced Micro Devices (AMD: chart) sent the Nasdaq lower. The early decline Tuesday is contributed to concern that profit and sales figures from aluminum giant Alcoa (AA: chart) and telecommunications-equipment maker Lucent Technologies (LU: chart) may be a harbinger of a disappointing second-quarter earnings season. Lucent Technologies announced after market close that it will rake in $300 million less in quarterly revenue than analysts expect. Shares of Alcatel, which will soon acquire the company, dropped 5% in Paris. Another piece of disappointing earnings news came from Alcoa which reported a 62% profit jump in Q2 but a slower-than-forecast 19% sales rise. Alcoa shares dropped over 4% in light Frankfurt trade on Tuesday. LG.Philips LCD (LG: chart) continued the trend of negative news in the flat-screen television market after swinging to a $341 million quarterly loss. It also lowered its capital expenditure guidance. Dow Jones futures were recently lower 31 points, S&P 500 futures fell 2.5 points, and Nasdaq futures weakened 6.2 points.

Lucent Technologies Inc, (LU: chart), communications networks developer, reported it expects Q3 per-share income of 2 cents, down from 7 cents in the year-earlier quarter, missing analysts expectations for per-share income of 4 cents. The company added that it also anticipates Q3 revenue of $2.04 billion, compared with $2.34 billion during the same period in the previous year. As for the declines, the company cited lower sales to North American mobility customers, as well as decreased revenues in China. The company has agreed to merge with Alcatel.

Alcoa Inc (AA: chart), producer of aluminum, reported Q2 net income of 85 cents a share, up from 52 cents a share a year ago on revenue growth. Income from continuing operations amounted to 86 cents a share, matching per-share analysts’ expectations.

Pepsi Bottling Group Inc, (PBG: chart), producer of Pepsi-Cola beverages, reported flat Q2 net income on 10% higher revenue. The stronger-than-expected net was 61 cents a share, against 59 cents, in the year-earlier period. Shares outstanding dropped 4% to 241 million from 252 million. On an adjusted basis, the company earned 69 cents. The net figure reflects charges of more than 4 cents from stock-option expense and more than 3 cents from the devaluation of the Turkish lira. The company met analyst estimate of 59 cents for the quarter. Revenue reached $3.14 billion from $2.86 billion, strengthening in all geographic regions.

LG.Philips LCD Co., (LPL: chart), maker of liquid-crystal displays, reported it reversed to a loss in the Q2 as high inventories drove average selling prices sharply lower. The company added it lost 322 billion won ($340 million) in current period, compared with a profit of 41 billion won in the same period last year. The result was slightly worse than expectations, as analysts’ forecast the company to post a net loss of 319.5 billion won. Sales advanced 0.3% to 2.32 trillion won ($2.49 billion), compared with analysts'' forecast of 2.31 trillion won. LG.Philips LCD, like other flat panel display makers in Asia, was hit by sharp price declines as sales of TVs using the technology during the World Cup soccer tournament failed to meet expectations.