MarketWatch.com - Pre-Market Indications

Thursday, July 15, 2010

Indications: Futures eye J.P. Morgan results, weak China data

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By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- U.S. stock futures drifted into negative territory on Thursday as investors geared up for key earnings from J.P. Morgan and a slew of U.S. economic data, and absorbed news on slowing Chinese growth.

Futures for the Dow Jones Industrial Average fell 7 points to 10,299, while those for the S&P 500 fell 0.5 points to 1,090.60. Futures for the Nasdaq 100 rose 0.1 points to 1,853.

U.S. stocks closed with slight gains Wednesday, with the Dow industrials just managing to extend their recent winning streak, as an upbeat forecast from Intel Corp. vied with more disconcerting views on the U.S. economy from retailers and the Federal Reserve. The Dow Jones Industrial Average ended up ended up 3.7 points, or 0.04%, to 10,366.72 for its seventh straight session of gains.

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The S&P 500 Index fell 0.17 point, or 0.02%, to 1,095.17, dragged lower by financial stocks. The Nasdaq Composite Index rose 7.81 points, or 0.4%, to 2,249.84, with the tech-heavy index bolstered by Intel's earnings and sales forecast.

"A second weak retail sales report in a row adds weight to the evidence that the U.S. is slowing -- rate hikes are off the agenda for the foreseeable future," said Rob Carnell, chief international economist with ING in a note to investors.

The market is facing a heavy data schedule for Thursday with weekly jobless claims, producer prices for June and the Empire State index for July, all at 8:30 a.m. Industrial production data for June will be released at 9:15 a.m. and Philly Fed data will be released at 10 a.m. All times are Eastern.

Vying equally for attention will be corporate earnings, with banking big hitter J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 40.35, -0.13, -0.32%) due to report quarterly results before the opening bell.

"Markets are looking for earnings per share of 71 cents and revenue of $25.3 billion but (CEO) Jamie Dimon's outlook for the economy and credit losses will probably be one of the key drivers of the day," said Jim Reid, strategist for Deutsche Bank in a note to investors.

Shares of Novartis /quotes/comstock/13*!nvs/quotes/nls/nvs (NVS 50.75, +0.63, +1.26%) could be active after the Swiss pharmaceutical group reported second-quarter profit rose to $2.4 billion and the group lifted its sales outlook for the year. After the U.S. market close, Google /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 491.34, +2.14, +0.44%) will report its own results.

Shares of GlaxoSmithKline /quotes/comstock/13*!gsk/quotes/nls/gsk (GSK 36.35, +0.63, +1.76%) could be in focus on Thursday. The group may keep its diabetes drug Avandia on the U.S. market following a Food and Drug Administration advisory panel recommendation, though the company announced $2.4 billion in legal charges.

China growth data was also weighing on investors' minds ahead of the U.S. open, a factor that contributed to losses for Europe and Asia. China reported that second-quarter gross domestic product grew 10.3% over the same period a year earlier, slowing from the 11.9% annual growth recorded in the first quarter. That was below the 10.5% expansion predicted by economists surveyed by FactSet Research.

"The overall picture suggests that economic activity is feeling the monetary policy tightening intended to cool down the housing market earlier this year," said analysts at UniCredit, who said data still shows more of a "controlled slowdown rather than a hard landing."

Asia shares managed to recoup related losses, with property plays in Shanghai turning higher. Shares of Agricultural Bank of China opened 2.2% higher in their trading debut but then pared those gains as sellers emerged within minutes. See China's AgBank rises and falls in Shanghai

In the currency markets, the euro /quotes/comstock/21o!x:seurusd (CUR_EURUSD 1.2815, +0.0077, +0.6045%) gained 0.4% to $1.2783.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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