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Thursday, August 5, 2010

Indications: Stock futures dip after jobs data; ECB on hold

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By Polya Lesova and Nick Godt, MarketWatch

Stock futures drop after U.S. jobs data; ECB, BOE on hold

NEW YORK (MarketWatch) -- U.S. stock futures traded lower on Thursday, with a rise in jobless claims hitting sentiment ahead of the key monthly employment report on Friday.

Earlier, the European Central Bank and the Bank of England left their lending rates unchanged, as expected.

Futures on the Dow Jones Industrial Average fell 32 points to 10,603, and Nasdaq 100 futures lost 4.25 points to 1,901. S&P 500 futures were virtually unchanged at 1,119.70.

The Dow /quotes/comstock/10w!i:dji/delayed (DJIA 10,659, -21.30, -0.20%) dropped 0.4% Wednesday to end at 10,680.43, its highest close since May 13.

After trading slightly higher early Thursday, futures took a turn lower after the government said jobless claims rose by 19,000 in the latest week to reach 479,000, their highest level since April.

"As much as I would love to point out how volatile these weekly moves can be, this is clearly a troubling development," said Jennifer Lee, a senior economist with BMO Capital Markets.

The data, she said, matched similar softness in employment trends in other recent national economic reports.

Earlier, the ECB kept its key lending rate unchanged at a record low of 1%. Speaking during a press conference after the decision, ECB President Jean-Claude Trichet said the stress tests of European banks completed last month have helped increase transparency and were a step toward restoring market confidence in the banking sector.

The Bank of England also made no change to monetary policy, leaving its key lending rate at a record low 0.5%.

Many U.S. retailers were reporting same-store sales for July. Costco Wholesale Corp. /quotes/comstock/15*!cost/quotes/nls/cost (COST 56.39, -1.01, -1.76%) said its July sales at stores open at least a year rose 6%. Analysts polled by Thomson Reuters had, on average, expected same-store sales to rise 5.5%.

PPL Corp. /quotes/comstock/13*!ppl/quotes/nls/ppl (PPL 26.58, -1.14, -4.11%) swung to second-quarter net income of $85 million, or 22 cents a share, from a loss of $7 million, or 2 cents a share, in the year-ago period.

Viacom Inc. /quotes/comstock/13*!via/quotes/nls/via (VIA 38.01, -0.39, -1.02%) said its second-quarter net income rose to $420 million, or 69 cents a share, from $277 million, or 46 cents a share, from the year-ago period.

Kraft Foods Inc. /quotes/comstock/13*!kft/quotes/nls/kft (KFT 29.50, -0.25, -0.84%) will release earnings after the market close.

European shares gain

The Stoxx Europe 600 index /quotes/comstock/22c!sxxp (ST:SXXP 261.48, -0.69, -0.26%) gained 0.1% in afternoon trading.

Mining giant Rio Tinto /quotes/comstock/13*!rtp/quotes/nls/rtp (RTP 54.63, -0.09, -0.16%) /quotes/comstock/23s!a:rio (UK:RIO 3,430, +18.00, +0.53%) said its first-half net profit soared to $5.85 billion and declared an interim dividend of 45 cents a share.

Banking group Barclays PLC /quotes/comstock/13*!bcs/quotes/nls/bcs (BCS 20.81, -0.90, -4.15%) /quotes/comstock/23s!a:barc (UK:BARC 324.00, -15.85, -4.66%) reported a 29% rise in first-half net profit, but the bottom line was muddied by one-off gains. Shares of Barclays dropped 2.7% in London trading. Read more about Barclays.

In Germany, Deutsche Telekom AG /quotes/comstock/11i!dteg.y (DTEGY 13.39, -0.37, -2.65%) /quotes/comstock/11e!fdte (DE:DTE 10.23, -0.28, -2.67%) said its second-quarter net profit fell 9% to 475 million euros ($626 million).

Consumer-goods giant Unilever /quotes/comstock/13*!ul/quotes/nls/ul (UL 27.89, -1.44, -4.91%) /quotes/comstock/13*!ul/quotes/nls/ul (UL 27.89, -1.44, -4.91%) /quotes/comstock/23s!e:ulvr (UK:ULVR 1,736, -95.00, -5.19%) reported a 40% jump in second-quarter net profit, but its performance still disappointed investors as lower sales prices hurt the group's margin. Its shares dropped 3.6% in London. Read more about Unilever's results.

Shares of oil giant BP PLC /quotes/comstock/13*!bp/quotes/nls/bp (BP 40.61, +1.22, +3.10%) /quotes/comstock/23s!a:bp. (UK:BP. 423.40, +1.75, +0.42%) gained 2.4% after the firm said it has received authorization to conduct cementing operations on the Macondo well in the Gulf of Mexico. The actions are part of the so-called static kill procedure to stop the flow of oil from the well.

Meanwhile, officials from the European Union and the International Monetary Fund said that the Greek economic program has "made a strong start."

The quantitative performance criteria have all been met, and important reforms are ahead of schedule, officials said after they completed their first review of the program. Read more about Greece's economy.

The euro /quotes/comstock/21o!x:seurusd (EURUSD 1.3174, +0.0022, +0.1673%) gained 0.3% to $1.3195. German manufacturing orders rose 3.2% in June compared to the previous month, exceeding economists' expectations, government data showed.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 80.83, -0.06, -0.08%) , which tracks the performance of the greenback against a basket of other major currencies, rose 0.2% to 80.73.

In the commodity markets, gold futures gained $2.40 to $1,198.30 an ounce in electronic trading on the New York Mercantile Exchange. Oil futures edged lower to trade at $81.93 a barrel.

Asian stocks finished mostly higher, with Japan's Nikkei Stock Average index ending up 1.7%. However, China's Shanghai Composite index fell 0.7%.

Polya Lesova is a reporter for MarketWatch, based in Frankfurt. Nick Godt is MarketWatch's markets editor, based in New York.

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