MarketWatch.com - Pre-Market Indications

Friday, December 17, 2010

Indications: Stock futures waver as Europe back in play

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By Kate Gibson and Barbara Kollmeyer, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures pointed to a reticent start Friday, a day after Wall Street hit two-year highs, as worries from overseas once again came back into play after Ireland was hit with a downgrade.

“Unfortunately we’re still in an environment where European sovereign debt is still an issue, and then the dollar goes up a bit, commodities go up a bit and U.S. equities get hit a little bit,” said Art Hogan, chief market strategist at Jefferies & Co.

Futures for the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,407, -24.00, -0.21%)  added 5 points to 11,436. S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,238, -1.00, -0.08%)  were flat at 1,238.5. On Thursday, both the Dow /quotes/comstock/10w!i:dji/delayed (DJIA 11,474, -25.09, -0.22%)   and S&P 500 /quotes/comstock/21z!i1:in\x (SPX 1,242, -0.59, -0.05%)   ended at their highest level since September 2008.

Futures for the Nasdaq 100 /quotes/comstock/21m!f:nd\h11 (NDH11 2,222, +2.25, +0.10%)  rose 1.25 points to 2,220.5.

Asia's week ahead

Japan next week is facing a full slate of economic news. MarketWatch's Phani Kumar reports.

As the year winds down, strategists said volumes were thinning out.

“There’s no incentive to buying stocks right now,” said Philip Shaw, chief economist at Investec Securities. “A lot of money has been taken off the table. It’s more a matter of getting the positions you want for the new year.”

“There’s certainly an end-of-year feel in markets at the moment, and it’s really only the odd one or two events that are generating any sort of market movements,” he added. “European debt is one of those.”

Markets in Europe gave way to selling toward midday as Moody’s Investors Service cut Ireland’s credit rating by five notches to Baa1 from Aa2.

While the move was mostly expected, Shaw noted it still had an impact, with credit spreads for peripheral debt widening out.

“The impact could be felt in the opening hours of U.S. trading,” he said.

In Washington, the U.S. House of Representatives narrowly passed a two-year extension of tax cuts dating back to the presidency of George W. Bush just before midnight Thursday, following weeks of intense debate. The bill has already passed a Senate vote. Analysts said this event largely went as expected and was unlikely to have much market impact. Read about the two-year extension of Bush-era tax cuts.

Data on tap for Friday include leading economic indicators for November, due at 10 a.m. Eastern time.

On the corporate front, shares of AstraZenca PLC /quotes/comstock/13*!azn/quotes/nls/azn (AZN 45.70, -3.53, -7.17%) fell nearly 6% in premarket trade after the firm was dealt a blow by the U.S. Food and Drug Administration over its Brilinta blood-thinning drug.

The FDA has asked for more analysis related to a study on the drug, a move that may delay the drug’s final approval by at least six months.

Oracle Corp. /quotes/comstock/15*!orcl/quotes/nls/orcl (ORCL 32.00, +1.73, +5.72%)  shares rose 4% in premarket trade after the software group beat analysts’ expectations with its second-quarter report late Thursday. See Oracle’s earnings report.

Shares of Research In Motion Ltd. /quotes/comstock/15*!rimm/quotes/nls/rimm (RIMM 60.95, +1.71, +2.89%)  gained 2% in premarket trade after the group beat forecasts for third-quarter earnings, aided by buoyant sales for its BlackBerry smartphones. See RIM’s report.

Also reporting late in the prior session, Take-Two Interactive Software /quotes/comstock/15*!ttwo/quotes/nls/ttwo (TTWO 13.38, +1.44, +12.06%)  said it swung to a profit for the quarter ended Oct. 31, helped by upbeat sales of a key basketball game and other videogames.

European stocks were mostly weaker, led by heavy losses for AstraZeneca, while banks also declined, taking no inspiration from the German Ifo Institute’s business-climate gauge, which ended 2010 at a record high. See story on German Ifo index.

Kate Gibson is a reporter for MarketWatch, based in New York. Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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