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Thursday, July 8, 2010

Indications: U.S. stock futures point south as ECB, data loom

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By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- U.S. stock futures edged lower on Thursday, with focus on a European Central Bank meeting for later, as well as U.S. economic data and same-store sales results to come.

Futures for the Dow Jones Industrial Average were down 16 points to 9,964, while those for the S&P 500 were down 2.4 points to 1,056.90. Futures for the Nasdaq 100 fell 5.50 points to 1,784.

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U.S. stocks saw early gains turn into a rally in the final stretch of trading Wednesday, as earnings hopes lifted financial stocks while energy stocks received a boost after a higher forecast for global oil demand.

The Dow Jones Industrial Average gained 227.43 points, or 2.4%, to 9,971.05. The S&P 500 Index rose 26.88 points, or 2.6%, to 1,054.97, led by a 3.8% advance in financials. The Nasdaq Composite rose 51.45 points, or 2.5%, to 2,145.28.

On Thursday, the weekly jobless claims report will provide an update of the market, with forecasts for the level to fall to 458,000, against 472,000 the prior week, according to economists polled by MarketWatch.

Retailers will also provide same-store sales data for June, with analysts expecting improvement on the prior month, helped by clearance sales and hot weather that sent shoppers to stores. See Retailers' preview

One of the first to report, Costco Wholesale /quotes/comstock/15*!cost/quotes/nls/cost (COST 54.29, +0.29, +0.54%) said June same-store sales rose 4%, against expectations for a rise of 3.7%.

Other stocks in focus include U.S. lender Wells Fargo /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 26.66, +1.51, +6.00%) , which said it will cut 3,800 jobs and close a business unit that specialized in subprime and other loans issued through its consumer finance stores. See Wells Fargo to cut jobs

The International Monetary Fund said late Wednesday that the global economy will continue to recover this year and next, despite the turbulence from Europe and worries about sovereign debt. Turbulence in financial markets has "cast a cloud over the outlook," the IMF said. See IMF sees global recovery

The European Central Bank will meet on Thursday, with investors listening up for any comments from President Jean-Claude Trichet over European bank stress tests, the methodology of which was released the prior session. Interest rates in Europe, and in the U.K. -- with the Bank of England also meeting -- are not expected to change.

European banks rallied a second day lifting Europe, even as analysts criticized the stress test plans as too soft. There was no detail given on the losses banks would have to be able to withstand on their sovereign debt holdings, but the tests are widely reported to assume a 17% loss on Greek sovereign debt, 3% on Spanish government bonds and no losses on German debt. See full story.

In Asia, stocks rose with the Australian market hitting a fresh seven-day high after a stronger-than-expected June employment report, which lifted the Aussie dollar and the euro.

Crude-oil futures rose 67 cents to $74.76 a barrel, while gold futures rose $3.20 to $1,202.30 an ounce.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.


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