MarketWatch.com - Pre-Market Indications

Wednesday, January 20, 2010

Indications: U.S. stock futures slip ahead of bank earnings

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By Steve Goldstein, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures slipped Wednesday ahead of a series of earnings from the financial sector as well as news of a Chinese clampdown on lending.

S&P 500 futures fell 3.8 points to 1,141.90 and Nasdaq 100 futures fell 7.5 points to 1,882.20. Futures on the Dow Jones Industrial Average dropped 32 points.

U.S. stocks hit a new 15-month high Tuesday, spurred by the biggest jump in health-care shares since the summer as traders bet on the outcome of a Senate race with big implications for proposed health-insurance reforms. The bet -- at least, on who would win -- was proved correct as Republican Scott Brown won, so the Democrats lost their filibuster-proof Senate majority.

The Dow Jones Industrial Average rose 115 points, the S&P 500 rose 14 points and the Nasdaq Composite gained 32 points.

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European pharmaceuticals like Sanofi-Aventis /quotes/comstock/13*!sny/quotes/nls/sny (SNY 41.31, +0.26, +0.63%) extended gains Wednesday, but the mood in broader markets was less sanguine, after the China Securities Journal said some banks in the country were asked to stop granting new loans in January. The Shanghai Composite dropped 2.9%.

Other world markets also dropped though not as steeply: the Nikkei 225 slipped 0.3% in Tokyo and the FTSE 100 fell 0.5% in London.

Commodities futures were down across the board, with oil futures losing more than $1 a barrel and gold futures down $11 an ounce.

Banks -- notably Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 16.32, +0.06, +0.37%) , Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 31.16, +0.78, +2.57%) and Wells Fargo /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 28.28, +0.20, +0.71%) -- head up Wednesday's slate of earnings releases.

"The first battery of earnings results failed to give a clear-cut picture of sustainability in the corporate recovery," said Stefan Kolek, an analyst at UniCredit, noting that nine of 13 S&P 500 components beat on earnings but only six topped on revenue.

Late Tuesday, International Business Machines /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 134.14, +2.36, +1.79%) reported a stronger-than-forecast 9% rise in fourth-quarter profit. IBM shares were down 1% in Frankfurt trade.

The economics calendar features producer price and housings starts data for December, both due at 8:30 a.m. Eastern.

Euro weakness continued, with the shared currency falling 0.7% to $1.4181. The dollar was lower against the Japanese yen.

Yields on 10-year Treasury bonds fell 3 basis points to 3.67%.

Steve Goldstein is MarketWatch's London bureau chief.


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