MarketWatch.com - Pre-Market Indications

Tuesday, January 26, 2010

Indications: U.S. stock futures lower on Japan, China fears

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By Steve Goldstein, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures fell on Tuesday on worries over the fiscal health of the world's second-largest economy, Japan, and moves to limit the growth in the world's third largest, China, as a slate of earnings are due.

S&P 500 futures fell 6.9 points to 1,085.70 and Nasdaq 100 futures fell 4.5 points to 1,794.00. Futures on the Dow Jones Industrial Average fell 47 points.

U.S. stocks rose Monday in light trade, as investors looked ahead to a rate decision, news on the confirmation of Federal Reserve Chairman Ben Bernanke, the State of the Union address and bank regulatory developments. The Dow Jones Industrial Average rose 23 points, the S&P 500 added 5 points and the Nasdaq Composite added 5 points.

While worries over Greece diminished on Monday as a bond offering from the country drew strong investor interest, Standard & Poor's Ratings Services warned Tuesday that it may downgrade Japan's sovereign credit ratings.

That warning -- after Japanese equities ended trading -- initially sent the dollar spiking vs. the yen, before the greenback dropped again on increased risk aversion.

Concerns over Chinese moves to restrict lending also hit markets.

Metals futures, notably platinum, dropped sharply, and oil futures fell by 67 cents a barrel.

The British pound also was weaker against both the dollar and the euro as the U.K. economy became the last of the major industrialized nations to escape recession with a worse-than-forecast 0.l% rise in the fourth quarter.

Earnings season rolls on with results from heavyweights Johnson & Johnson /quotes/comstock/13*!jnj/quotes/nls/jnj (JNJ 63.22, +0.02, +0.03%) , DuPont /quotes/comstock/13*!dd/quotes/nls/dd (DD 32.82, +0.32, +0.98%) , Verizon Communications /quotes/comstock/13*!vz/quotes/nls/vz (VZ 30.68, +0.34, +1.12%) and Travelers /quotes/comstock/13*!trv/quotes/nls/trv (TRV 48.89, +0.58, +1.20%) .

Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 203.08, +5.33, +2.69%) rose 2% in Frankfurt as the consumer electronics darling reported a stronger-than-forecast 50% profit rise during its fiscal first quarter, though iPhone shipments lagged estimates. A new accounting rule helped Apple book more revenue from the iPhone and Apple TV than it had in prior quarters.

VMWare /quotes/comstock/13*!vmw/quotes/nls/vmw (VMW 42.00, +0.42, +1.01%) may advance after the company projected stronger-than-forecast first-quarter revenue.

Novartis /quotes/comstock/13*!nvs/quotes/nls/nvs (NVS 53.46, -0.11, -0.21%) rose in Swiss trade as the drugmaker reported a 50% profit rise and promoted the head of its pharmaceutical unit to be its next chief executive.

German industrial giant Siemens /quotes/comstock/13*!si/quotes/nls/si (SI 89.31, +1.81, +2.07%) reported a stronger-than-forecast 23% profit rise on cost cutting.

The economic calendar features releases on house prices in November and consumer confidence in January.

Europe stocks dropped for the fifth straight day, with the Dow Jones Stoxx 600 falling 0.9%. The Hang Seng dropped 2.4%.

Yields on 10-year Treasury bonds fell 7 basis points to 3.56%.

Steve Goldstein is MarketWatch's London bureau chief.


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