MarketWatch.com - Pre-Market Indications

Wednesday, June 30, 2010

Indications: U.S. stock futures pare gains after ADP report

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By Steve Goldstein and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures wavered Wednesday after disappointing private payrolls data offset a European Central Bank auction that signalled credit is loosening.

Stock index futures were mildly up after a brief detour into negative territory after the release of the ADP employment report, which found the addition of 13,000 jobs in the private sector in June. Economists were looking for about four times the figure, which comes ahead of Friday's monthly jobs report from the U.S. government.

"The lower-than-anticipated ADP reading introduces modest downside risk to consensus estimate that the Labor Department will report on Friday that private industry employment rose by 110,000," Alan Levenson, chief economist at T. Rowe Price Associates, wrote in a note. T. Rowe Price's estimate is a rise of 90,000, Levenson added.

Up about 40 points before the ADP report, futures for the Dow Jones Industrial Average were lately up 10 points at 9,807.00. S&P 500 futures retained a 1-point gain at 1,036.30, while Nasdaq 100 futures were also up 1 point at 1,764.50.

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Crude-oil futures inched up 9 cents to $96.03 a barrel on the New York Mercantile Exchange. Gold fell $4.20 to $1,238.20 an ounce.

U.S. stocks fell sharply to finish at their lowest level of the year Tuesday after a drop in U.S. consumer confidence and in leading indicators in China dimmed hopes of a global economic recovery. The Dow Jones Industrial Average fell 268 points to fall considerably below the 10,000 mark, and the S&P 500 ended at its worst levels since late October. Yields on two-year Treasury notes hit an all-time low.

One of the worries that contributed to Tuesday's slide, the health of Europe banks, was partly alleviated Wednesday after the European Central Bank said it issued 131 billion euros of three-month loans. Given that a 442 billion euro one-year lending program is due to expire Thursday, the allocation was interpreted by the market that the Continent's lenders have alternatives for financing besides the central bank. See full story.

The euro /quotes/comstock/21o!x:seurusd (CUR_EURUSD 1.2260, +0.0076, +0.6238%) rallied after the results of the ECB tender, as did the shares of Europe banks.

A Chicago-area manufacturing gauge will come out shortly after the open.

Bonds declined, with yields on the two-year notes edging up 2 basis points to 0.63% and yields on 10-years also up 2 basis points to 2.97%.

The worries over China continued, however. Chinese shares fell for the sixth straight session to end at their worst level in nearly 15 months, with the Shanghai Composite retreating 1.2%.

Two cancer-related deals were announced, with Celgene /quotes/comstock/15*!celg/quotes/nls/celg (CELG 50.50, -2.74, -5.15%) paying $2.9 billion in cash and stock for Abraxis /quotes/comstock/15*!abii/quotes/nls/abii (ABII 73.42, +12.11, +19.75%) , and Sanofi-Aventis /quotes/comstock/13*!sny/quotes/nls/sny (SNY 30.09, +0.34, +1.14%) paying up to $560 million for privately held TargeGen.

Also in the M&A space, Boeing /quotes/comstock/13*!ba/quotes/nls/ba (BA 62.96, -0.08, -0.13%) said it's going to buy combat-systems provider Argon ST /quotes/comstock/15*!stst/quotes/nls/stst (STST 34.21, +9.78, +40.03%) for $34.50 a share, or about $775 million.

Steve Goldstein is MarketWatch's London bureau chief. Kate Gibson is a reporter for MarketWatch, based in New York.


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