MarketWatch.com - Pre-Market Indications

Friday, October 15, 2010

Indications: U.S. futures edge down after GE; Bernanke awaited

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By William L. Watts, MarketWatch

LONDON (MarketWatch) â€" U.S. stock futures traded mostly lower Friday, losing a little ground after earnings from industrial titan General Electric Co. and ahead of an eagerly anticipated speech by Federal Reserve Chairman Ben Bernanke and a heavy round of economic data.

Bernanke, who is scheduled to speak at 8:15 a.m. Eastern time at the Boston Fed’s annual conference, will be watched for further confirmation that the Fed is prepared to embark on another round of monetary stimulus via quantitative easing in an effort to shore up a faltering economy and fend off the threat of deflation. Read about Bernanke's upcoming speech.

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S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,179, +5.70, +0.49%)  were off 1.80 points at 1,171.70, while futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 11,088, +36.00, +0.33%)  slipped 14 points to 11,038. Nasdaq Composite futures /quotes/comstock/21m!f:nd\z10 (NDZ10 2,072, +10.25, +0.50%)  were up 2 points at 2,064.

The prospect of additional quantitative easing has helped lift investor appetite for risk, translating into gains for U.S. and global equities.

“That is obviously the No. 1 issue that will drive currencies, bonds and equities,” said Heino Ruland, managing director at Ruland Research in Eppstein, Germany. “The odd thing is the worse the [economic] numbers for the United States will be, the better [it is for equities] because it will actually increase the odds of quantitative easing.”

On the corporate front, General Electric /quotes/comstock/13*!ge/quotes/nls/ge (GE 17.16, -0.12, -0.69%)  reported third-quarter net profit attributable to the company of $2.06 billion, or 18 cents a share, down from $2.49 billion, or 23 cents a share, in the same period a year ago. Earnings from continuing operations rose to 29 cents a share from 22 cents a year ago, topping the consensus estimate of 27 cents a share produced by a FactSet Research survey of analysts.

GE said revenues fell 5% to $35.89 billion. Analysts had forecast sales of $37.43 billion. Shares of GE dropped 2.4% in premarket trading.

A heavy round of economic data is on tap. The September consumer-price index, or CPI, and September retail-sales data are set for release at 8:30 a.m. Eastern, while the New York Fed’s Empire State index, a gauge of regional manufacturing activity, is set for release at the same time.

Data on business inventories and University of Michigan consumer sentiment are set for release later in the day.

Economists surveyed by MarketWatch produced an average estimate of a 0.2% rise in CPI after a 0.3% rise in August. Retail sales are forecast to rise 0.5% after a 0.4% August increase.

“Bernanke’s speech on monetary policy in Boston will be the main focus today, with the market expecting him to effectively confirm that the Fed will expand [quantitative easing] at the Nov. 3 meeting,” wrote strategists at Lloyds TSB. “Anything less would be a disappointment, but Bernanke is aware of this, and he is unlikely to have let the market go this far towards pricing in QE if he intended to disappoint us today.”

After four sessions of gains, the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,095, -1.51, -0.01%)  lost 1.51 points Thursday to close at 11,094.57. The S&P 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,174, -4.29, -0.36%)  fell 4.29 points to 1,173.81, while the Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,435, -5.85, -0.24%)  shed 5.85 points to 2,435.38 for its first decline in six sessions.

Rising quantitative-easing expectations and a solid start to the third-quarter earnings season helped fuel equity gains earlier in the week.

Shares of Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 540.93, -2.37, -0.44%)  rallied nearly 9% in thin premarket trading after the Internet-search giant reported a 32% rise in third-quarter profit after Thursday’s closing bell to beat Wall Street estimates.

Shares of Seagate Technology Inc. /quotes/comstock/15*!stx/quotes/nls/stx (STX 12.69, -0.06, -0.43%)  surged 21% in premarket trading. The hard-disk-drive maker said it’s in talks with an unnamed company about going private and that the board was evaluating other alternatives.

Toy-maker Mattel Inc. /quotes/comstock/15*!mat/quotes/nls/mat (MAT 24.00, -0.29, -1.19%)  said Friday its third-quarter net profit rose 23% to $283.3 million, or 77 cents a share, from $229.8 million, or 63 cents a share, in the same period a year earlier. Net sales rose 2% to $1.83 million. Analysts surveyed by FactSet had forecast earnings of 75 cents a share on sales of $1.94 billion.

Advance Micro Devices /quotes/comstock/13*!amd/quotes/nls/amd (AMD 7.14, -0.08, -1.12%)  said after Thursday’s closing bell that its third-quarter loss narrowed to 17 cents a share from 18 cents a year ago, while revenue rose by nearly 16% to $1.62 billion.

The dollar remained on the defensive on expectations the Federal Reserve will implement additional quantitative easing. The euro rose 0.3% versus the U.S. unit to trade at $1.4077. The dollar fell 0.4% versus the Japanese currency to trade at 81.19 yen.

Gold extended gains as the dollar remained under pressure, with the December futures /quotes/comstock/21e!f:gc\z10 (GCZ10 1,373, -4.20, -0.30%)  contract rising $1 to $1.378.60 an ounce in electronic trade.

European stocks were mostly higher Friday, with retail stocks in focus after trading updates from some of the region’s big names.

The French CAC 40 index /quotes/comstock/30t!i:px1 (FR:PX1 3,833, +13.39, +0.35%)  rose 0.1% and the German DAX 30 index /quotes/comstock/30p!dax (DX:DAX 6,500, +44.99, +0.70%)  gained 0.2% although London’s FTSE 100 index /quotes/comstock/23i!i:ukx (UK:UKX 5,725, -2.15, -0.04%)  slipped 0.3%.

William L. Watts is a reporter for MarketWatch in London.

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