The Associated Press

NEW YORK July 14, 2004 — U.S. stock futures were headed steadily downward early Wednesday as investors digest Intel Corp.'s disappointing 2004 outlook and prepares for expected weak June retail sales data.
Dow Jones futures fell 51 points recently, Nasdaq futures declined 17 points, and Standard & Poor's futures were down 6.40 points.

In London, the FTSE 100 Index declined 0.7 percent to 4327.80. Investors are turning nervous about second-quarter earnings following Intel's disappointing report late Tuesday. Financial stocks led decliners along with telecoms.

In Japan, the benchmark Nikkei 225 Stock Average ended down 251.97 points at 11356.65, also on a tech selloff following Intel's news. The market welcomed reports of merger talks between Japanese banking giant Mitsubishi Tokyo Financial Group and UFJ Holdings, but UFJ trading hurt markets in the afternoon.

In U.S. corporate news, fast-food chain McDonald's Corp. said early Wednesday that systemwide sales for McDonald's restaurants rose 8.4 percent in June and 11.6 percent during the second quarter, leading to a 27 percent increase in expected second-quarter earnings to about 47 cents a share. Analysts surveyed by Thomson First Call currently expect McDonald's to earn 44 cents a share in the second quarter.

In what would be the gambling industry's second blockbuster deal in a month, Harrah's Entertainment Inc. is close to a deal to buy rival Caesars Entertainment Inc., The Wall Street Journal reports. Terms of the proposed transaction weren't immediately clear. Caesars has a market value of about $4.3 billion, not counting about $4.5 billion in debt.

After the bell Tuesday, Intel lowered its full year gross margin forecast from 62 percent to 60 percent because of higher sales of lower margin products and slower-than-expected growth in microprocessor margins. The company's second-quarter earnings of 27 cents a share met Wall Street's expectations, although revenue of $8.05 billion was slightly below expectations of $8.10. In the third-quarter the company expects to generate revenue of $8.6 billion to $9.2 billion, the midpoint of which is above Wall Street's current forecast of $8.76 billion.

Juniper Networks Inc. swung to a second-quarter loss of 2 cents a share on substantial charges related to its acquisition of NetScreen Technologies Inc. Excluding items, however, the company's earnings of 8 cents a share trounced Wall Street's expectation of 4 cents. Second-quarter revenue of $307 million also beat Wall Street's forecasts.

Yum! Brands Inc. raised its 2004 earnings forecast by 3 cents a share, to $2.33. That is above the $2.31 expected by Wall Street. Second-quarter earnings, excluding a gain, climbed to 55 cents a share, also above Wall Street's expectation. The company expects same-store sales to climb at least 2 percent for the rest of the year. For the third-quarter Yum! Brands expects to earn 60 cents a share, in line with Wall Street's forecasts.

Companies reporting earnings Wednesday include Bank of America Corp., expected to report second-quarter earnings of $1.74 a share around 9:30 a.m. EDT. Genzyme Corp. is expected to report second quarter earnings of 40 cents a share before 9:30 a.m. Also expected Wednesday before the bell are Investors Financial Services Corp., and MGI Pharma Inc.

New York Times Co. is expected to report second-quarter earnings of 50 cents a share at 11:00 a.m. EDT.

After the bell, Advanced Micro Devices Inc. is expected to report second-quarter earnings of 9 cents a share, Apple Computer Inc. is expected to report third-quarter earnings of 15 cents a share. Also expected after the bell are QLogic Corp. and SanDisk Corp.

The Commerce Department is due to release the June retail sales report at 8:30 a.m. EDT Wednesday. Economists look for a decline in retail sales led by the pronounced decline already seen in unit auto sales in June, although chain store sales were also quite soft last month. The economists' forecasts center on a 0.7 percent overall decline, with sales up a mere 0.2 percent after auto dealer sales have been excluded.

The Labor Department is due to release the import price index for June at 8:30 a.m. EDT Wednesday. The center of economists' expectations is for a 0.2 percent increase.

Stocks ended mixed for a second day in a row, with the Dow Jones Industrial Average receiving a shot in the arm from healthcare members Pfizer Inc. and Johnson & Johnson. The Nasdaq Composite Index was held back by more news out of software companies, this time Red Hat Inc. and Compuware Corp.

The Dow industrial average gained 9.37, or 0.09 percent, to 10247.59, the Nasdaq lost 5.26, or 0.27 percent, to 1931.66 and the Standard & Poor's 500 Index added 0.78, or 0.07 percent, to 1115.13.

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