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US markets set for lower open as Wal-Mart, HP, Home Depot weigh


US markets are pointing to a softer start, with the tech laden Nasdaq pointing to a small drop at the opening, while the Dow Jones Industrial Average (DJIA) and S&P 500 look set to open flat to slightly negative.

US markets were digesting quarterly updates from computer hardware giant Hewlett Packard (NYSE:HPQ) and retailers Wal-Mart (NYSE:WMT) and Home Depot (NYSE:HD).  All three stocks are lower in pre-market trading, with HP by far the hardest hit.

Palo Alto, California headquartered HP reported second fiscal quarter  (3 months ended April 30th) net revenues of $31.6 billion, up 3% on the comparative quarter in the previous year, while GAAP diluted earnings per share (EPS) rose 14% to $1.24 (Q2 2010: $1.09).  HP’s President and CEO Leo Apotheker said HP “executed well and delivered a solid quarter”. However, it was guidance for full year earnings that drew attention from the market.  HP cut its  GAAP diluted earnings per share outlook down to “at least” $4.27 and non-GAAP diluted earnings per share outlook down to “at least” $5.00.  Shares in HP fell around 5% in pre-market trading in response to the downward revision. Based on pre-market indicators, HP will test its 52 week low today.

Shares in  Wal-Mart were hardly breathing enthusiasm into the market this morning after the company reported  that its second fiscal quarter net income rose to US$3.4 billion, or 97 cents per share, from US$3.3 billion, or 87 cents, a year earlier. Sales in the quarter climbed 4.4% to $103.4 billion. The Bentonville, Arkansas headquartered retail giant  beat its own guidance and consensus analyst expectations for the quarter, but still fell nearly 1.5% in pre-market trading. Investor’s appeared concerned about sluggish growth in the company’s core US market.  Wal-Mart expects second-quarter earnings to come in between $1.05 to $1.10 a share.

Home improvement retailer Home Depot is also pointing to a lower open this morning after the company upped its full year fiscal earnings guidance by less than investors had expected.  Atlanta headquartered Home Depot now expects full year fiscal earnings to come in at $2.24 per share, up from previous guidance of $2.20 per share.The company reported fiscal first-quarter (3 months ended May  1st)  earned $812 million, or 50 cents a share (Q1 2010: $725 million or 43 cents) on revenue of $16.82 billion (Q1 2010: $16.86 billion.)  Shares in Home Depot fell 0.5% in pre-market trading.

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