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Friday, August 20, 2010

Indications: U.S. stock futures drop as economic jitters remain

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By Simon Kennedy and Nick Godt, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures pointed to a further decline Friday as investors remained wary after a big drop in the previous session, spurred by another round of disappointing economic data.

Dow Jones Industrial Average futures fell 38 points to 10,197, and S&P 500 futures dropped 4.50 points to 1,066.80. Futures on the Nasdaq 100 were down 5.25 points to 1,814.75.

U.S. markets fell sharply Thursday after weak data on the jobs market and regional manufacturing reignited fears about the economic recovery.

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The Dow industrials /quotes/comstock/10w!i:dji/delayed (DJIA 10,151, -120.41, -1.17%) closed down more than 144 points, with all 30 components ending the day in the red.

No major U.S. economic data were scheduled for release Friday, but markets will get the chance to react to earnings from computer giants Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 11.90, -0.14, -1.16%) and Hewlett-Packard Co. /quotes/comstock/13*!hpq/quotes/nls/hpq (HPQ 39.58, -1.18, -2.90%) , which both announced their latest figures after Thursday's closing bell.

Dell reported a 15.5% rise in second-quarter profit, helped by increasing demand for servers and networking systems. Adjusted earnings were 32 cents a share, topping the 30 cents consensus estimate, while the company stuck to its third-quarter forecasts. See full story on Dell's earnings.

H-P reported a 6% rise in profit, having already released preliminary results when it announced the resignation of Chief Executive Mark Hurd earlier in the month. See story on H-P results.

Shares of H-P dipped 1.1% in premarket trading, while Dell was down 2.2%.

Deals make a comeback

Global merger activity is at its highest levels since late 2009, presenting a glimmer of economic confidence even as the stock and bond markets continue to to price in a weakening U.S. economy. Anupreeta Das and Dennis Berman discuss.

Hormel Foods Corp. /quotes/comstock/13*!hrl/quotes/nls/hrl (HRL 43.38, +0.01, +0.02%) posted third-quarter earnings of 63 cents a share on revenue of $1.73 billion, above Wall Street's expectations for earnings of 61 cents a share on revenue of $1.68 billion. The firm also lifted its 2010 forecast to $2.85 to $2.91 a share, up from $2.75 to $2.85 a share.

Hormel shares rose 2% in recent electronic trade.

Ann Taylor Stores Corp. /quotes/comstock/13*!ann/quotes/nls/ann (ANN 15.38, -0.09, -0.58%) said it swung to a second-quarter profit of $18.6 million, or 31 cents a share, from a loss of $18 million, or 32 cents a share, in the year-ago period. Analysts polled by FactSet Research expected the retailer to earn 32 cents a share, on average.

Its shares were down 0.5%.

Other stocks that could see active trading include Tyco International /quotes/comstock/13*!tyc/quotes/nls/tyc (TYC 38.35, +1.61, +4.39%) , after Standard & Poor's said the company will replace Smith International Inc. /quotes/comstock/13*!sii/quotes/nls/sii (SII 38.83, -1.34, -3.34%) in the S&P 500 index /quotes/comstock/21z!i1:in\x (SPX 1,064, -11.72, -1.09%) .

Tyco rose 4.9% in premarket action.

Shares in Gap Inc. /quotes/comstock/13*!gps/quotes/nls/gps (GPS 17.04, -0.68, -3.81%) could rise after the retailer reported forecast-beating earnings late Thursday and unveiled a $750 million stock-buyback plan.

Gap shares were up 1.9% ahead of the open.

The dollar gained against other major currencies, adding 0.8% against the yen at 83.11 yen. The euro fell 0.8% to $1.2704.

Oil futures fell, with the September-dated light crude-oil contract dropping $1.05 to $73.43 a barrel in electronic trading.

In international markets, the U.K.'s FTSE 100 index declined 0.3%, and Japan's Nikkei 225 average fell sharply to close down about 2% as weak U.S. data and worries over the yen hurt Tokyo shares.

Simon Kennedy is the City correspondent for MarketWatch in London. Nick Godt is MarketWatch's markets editor, based in New York.

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