- Pre-Market Indications

Tuesday, July 20, 2010

Indications: U.S. stock futures extend losses, IBM gloom weighs

Stock Assault 2.0 - Artificial Intelligence Stock Market Software Alert Email Print

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- U.S. stock futures extended losses ahead of the Wall Street open on Tuesday, with weaker-than-expected results from IBM souring sentiment, as investors awaited earnings reports from a string of companies including Goldman Sachs.

Futures for the Dow Jones Industrial Average dropped 80 points to 9,980, while those for the Nasdaq 100 fell 16.75 points to 1,788.50.

Futures for the S&P 500 slipped 10 points to 1,053.80.

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Market observers could find no obvious reason why futures were accelerating losses, but cited earnings from IBM /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 129.79, +1.76, +1.37%) and Texas Instruments /quotes/comstock/13*!txn/quotes/nls/txn (TXN 25.55, +0.78, +3.15%) overnight that disappointed analyst expectations. See IBM net rises 9% See Texas Instruments profit nearly triples.

"It's a continuation of a nervous market that's seeking direction," said Peter Cardillo, chief market economist with Avalon Partners. He added that housing market data due out later is also expected to be bleak and that could weigh on sentiment as well.

Data on U.S. housing starts for June are due for release at 8:30 a.m. Eastern.

The Dow /quotes/comstock/10w!i:dji/delayed (DJIA 10,154, +56.53, +0.56%) closed up 56.53 points, or 0.6%, to 10,154.43, capping a choppy session Monday that sent the index nearly 90 points higher intraday as well as into the red, helped by positive results from Halliburton Co. /quotes/comstock/13*!hal/quotes/nls/hal (HAL 29.17, +1.66, +6.03%) . That overrode data showing pessimism among home builders.

The S&P 500 Index closed up 6.37 points, or 0.6%, to 1,071.25, with utilities and tech leading all 10 industry groups higher.

Investors are bracing for another barrage of earnings Tuesday.

"It's such a big day today, there is absolutely loads of earnings data out, ahead of the bell we've got Goldman Sachs, Pepsi, the Bank of New York and loads of others," said David Jones, chief market strategist with IG Index. "After the close, we've got Apple."

He said one risk for the banks in particular is that they made so much money last year they could produce earnings that are less than half of those year-ago numbers, which could add to weaker sentiment.

"We had a good start to earnings a couple of weeks ago, but some of that enthusiasm went away and now the risk is if they miss expectations, we could see maybe an over exaggerated selloff," Jones said.

Among the early reporters, Bank of New York Mellon /quotes/comstock/13*!bk/quotes/nls/bk (BK 25.64, -0.09, -0.35%) reported earnings of 54 cents a share versus 15 cents a year ago.

Home appliance manufacturer Whirlpool Corp. /quotes/comstock/13*!whr/quotes/nls/whr (WHR 91.36, +0.95, +1.05%) said second-quarter net profit attributable to common shareholders jumped to $205 million, or $2.64 a share, from $78 million, or $1.04 a share, a year earlier. The group also lifted its outlook.

United Health Group /quotes/comstock/13*!unh/quotes/nls/unh (UNH 30.82, +0.48, +1.58%) said second-quarter net earnings rose to $1.123 billion, or 99 cents a share, from $859 million, or 73 cents a share, in the same period last year.

Goldman Sachs /quotes/comstock/13*!gs/quotes/nls/gs (GS 145.68, -0.49, -0.34%) , Pepsi /quotes/comstock/13*!pep/quotes/nls/pep (PEP 62.05, -0.40, -0.64%) , Harley-Davidson /quotes/comstock/13*!hog/quotes/nls/hog (HOG 23.61, +0.06, +0.25%) and Johnson & Johnson /quotes/comstock/13*!jnj/quotes/nls/jnj (JNJ 59.57, +0.13, +0.22%) will also report.

Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 245.58, -4.32, -1.73%) will report results after the market closes.

European markets also dropped, giving up earlier gains.

On the positive side, shares of Finnish mobile-phone maker Nokia /quotes/comstock/13*!nok/quotes/nls/nok (NOK 8.82, +0.08, +0.92%) rose 3.8% after a media report that the company plans to replace its chief executive.

Asian markets ended mostly higher Tuesday as Chinese stocks marched ahead on continued expectations Beijing will avoid further tightening measures as the nation's economic growth moderated.

Gold futures were down $4.70 at $1,177.30 an ounce, while crude oil was down 14 cents to $76.40 a barrel.

The euro /quotes/comstock/21o!x:seurusd (CUR_EURUSD 1.2897, -0.0049, -0.3785%) , which has gained ground against the dollar recently, dropped 0.3% to $1.2903.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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