MarketWatch.com - Pre-Market Indications

Friday, October 8, 2010

Indications: U.S. futures fall ahead of payrolls data

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By Simon Kennedy, MarketWatch

LONDON (MarketWatch) â€" U.S. stock-market futures dropped on Friday as investors awaited employment data for September, with Alcoa Inc. in focus after it kicked off earnings season by lifting its forecast for demand.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 10,910, -2.00, -0.02%)  fell 41 points to 10,871 and S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,154, -2.50, -0.22%)  dropped 5.10 points to 1,151.40.

Futures on the Nasdaq 100 index /quotes/comstock/21m!f:nd\z10 (NDZ10 2,010, -4.00, -0.20%)  were down 7.50 points at 2,006.50.

The move came after U.S. stocks finished mostly lower on Thursday. The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 10,949, -19.07, -0.17%)  closed down around 0.2%, having failed to breach the psychologically important 11,000 level.

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The tone for Friday will be largely set by the September nonfarm payrolls report, due at 8:30 a.m. Eastern time. Total nonfarm payrolls are expected to fall by 8,000, while private-sector jobs are expected to rise by 85,000 on the month. See the preview on nonfarm payrolls.

The unemployment rate is also expected to have risen slightly, to 9.7% from 9.6% in August.

While the data will be important, “the truth is that the market has been medicated for now,” Deutsche Bank said in a note to clients. “Strength in the report may be met with the QE2 [quantitative easing] intravenous drip being turned down and weakness may lead to it being pumped straight back up.”

There has been growing speculation in the markets as to whether the Federal Reserve will choose to implement another round of quantitative easing at its November meeting in order to boost the sluggish recovery.

St. Louis Federal Reserve Bank President James Bullard told CNBC Friday that the Fed will face a difficult decision on whether to begin another round of asset purchases.

“The economy has slowed, but it hasn’t slowed so much,” Bullard said. He added that he will go into the meeting “with an open mind.”

In currencies, the dollar was virtually flat against the euro and Japan’s yen ahead of weekend meetings of the World Bank and International Monetary Fund in Washington.

And in commodities, gold futures fell $5.40 to $1,329.60 an ounce, adding to Thursday’s losses, while crude-oil prices also edged down.

Among Friday’s stocks in focus, shares of Alcoa /quotes/comstock/13*!aa/quotes/nls/aa (AA 12.20, -0.17, -1.37%)  rose 3.6% in premarket trading after its late-Thursday announcement marked the unofficial start to earnings season.

Alcoa, part of the Dow industrials, reported a roughly 21% drop in third-quarter profit, but this still beat market expectations, and management also lifted its forecast for global aluminum demand in 2010. See full story on Alcoa’s results.

Also in focus, shares of chip maker Micron Technology Inc. /quotes/comstock/15*!mu/quotes/nls/mu (MU 7.11, +0.16, +2.30%)  could fall. Late Thursday, the company swung to a profit of $342 million, or 32 cents a share, for the fourth quarter of fiscal 2010, but this failed to match the 39-cents-a-share consensus forecast.

In Europe, banking giant Barclays PLC /quotes/comstock/23s!a:barc (UK:BARC 298.00, -6.05, -1.99%)   /quotes/comstock/13*!bcs/quotes/nls/bcs (BCS 18.72, -0.75, -3.85%)  was one of the biggest decliners. The stock dropped 2.9% after a major investor said it had hedged its entire holding in the company in a deal that results in around 220 million shares being sold.

The U.K.’s FTSE 100 index /quotes/comstock/23i!i:ukx (UK:UKX 5,643, -19.40, -0.34%) fell 0.9% in intraday trading. In Asia, Japan’s Nikkei 225 average closed down 1%, while the Shanghai Composite Index soared 3.1% as trading resumed after a week-long holiday.

Simon Kennedy is the City correspondent for MarketWatch in London.

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