MarketWatch.com - Pre-Market Indications

Monday, October 18, 2010

Indications: U.S. stock futures drop; Citigroup reports

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By William L. Watts, MarketWatch

LONDON (MarketWatch) â€" U.S. stock futures remained under pressure Monday, but trimmed losses after stronger-than-expected third-quarter earnings results from Citigroup Inc., while investors assessed the potential impact of an expected round of additional easing by the Federal Reserve.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 11,040, +16.00, +0.15%)  fell 24 points to 10,999, while S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,174, -0.50, -0.04%)  declined 2.9 points to 1,172. Futures on the Nasdaq 100 /quotes/comstock/21m!f:nd\z10 (NDZ10 2,093, -2.00, -0.10%)  rose 0.25 point to 2,095.75.

Citigroup /quotes/comstock/13*!c/quotes/nls/c (C 4.13, +0.18, +4.53%)  said third-quarter net income rose to $2.17 billion, or 7 cents a share. Analysts polled by FactSet Research had expected the company to earn 6 cents a share. Citigroup shares were higher in preopen trade.

Bank stocks saw heavy pressure last week on worries that mishandled mortgages would translate into higher costs and other headaches for lenders. Shares of Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 12.01, +0.03, +0.21%)  and Citigroup were among those hammered by investors.

“The drama in the U.S. mortgage market (foreclosures and role of banks) has the potential to unsettle overall markets. The big question will be whether the correction of last week will continue this week or whether it will attract investors,” wrote strategists at KBC Bank in Brussels.

Equity markets are showing signs of earnings “fatigue,” said Morten Kongshaug, chief analyst at Danske Bank in Copenhagen.

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Companies have produced few earnings disappointments so far in the third quarter, but the market’s ability to continue rallying based on better-than-expected earnings is nearing exhaustion, he said.

Meanwhile, the prospect of additional quantitative easing, which had previously helped boost equities, is viewed increasingly as a “pain reliever,” but not a cure for a potentially ailing economy, Kongshaug said.

Investors will see another heavy round of earnings this week, with 11 Dow components and 109 S&P 500 firms set to report. See Market Snapshot.

Halliburton Co. /quotes/comstock/13*!hal/quotes/nls/hal (HAL 33.98, -1.84, -5.14%)  said its third-quarter net income rose to $544 million, or 60 cents a share, from $262 million, or 29 cents a share, in the same period a year ago. The latest results included one-time charges of 5 cents a share and a gain from discontinued operations of 7 cents. Revenue rose to $4.67 billion from $3.59 billion.

Wall Street analysts expected Halliburton to earn 56 cents a share on revenue of $4.63 billion, according to FactSet.

Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 316.23, +1.49, +0.47%)  is set to report fiscal fourth-quarter earnings after the closing bell on Monday. The company is expected to earn more than double its net income to $4.09 a share from the previous quarter, boosted by booming demand for its iPhone and iPad products. Read Apple earnings preview.

IBM /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 141.90, +0.84, +0.60%)  is also set to report after the close Monday, with analysts surveyed by FactSet producing a consensus profit forecast of $2.76 a share in the third quarter.

Toy maker Hasbro Inc. /quotes/comstock/13*!has/quotes/nls/has (HAS 47.18, +2.09, +4.64%)  said its third-quarter net profit rose 3.2% to $155.2 million from $150.4 million a year earlier as revenue rose 2.7% to $1.31 billion. Earnings rose to $1.09 a share from 99 cents as the average number of shares declined. Analysts polled by FactSet had forecast earnings of $1.04 a share on sales of $1.29 billion.

Northeast Utilities /quotes/comstock/13*!nu/quotes/nls/nu (NU 30.31, -0.40, -1.29%)  and NStar /quotes/comstock/13*!nst/quotes/nls/nst (NST 39.42, -0.11, -0.28%)  announced Monday that they have agreed to merge. The deal has an equity value of $9.5 million and creates a company with a $17.5 billion enterprise value.

On the economic front, data on industrial production and capacity utilization for September will be released at 9:15 a.m. Eastern time.

U.S. stocks finished mostly higher on Friday, boosted in part by a strong earnings report from Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 611.02, +9.57, +1.59%) .

The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,106, +43.14, +0.39%)  fell 31.79 points, or 0.3%, to close at 11,062.78. The Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,469, +0.45, +0.02%) , however, climbed 1.4% to end at 2.468.77, while the Standard & Poor’s 500 index /quotes/comstock/21z!i1:in\x (SPX 1,179, +2.83, +0.24%)  rose 0.2% to 1,176.19.

European stocks erased early losses to gain ground Monday. Early pressure was seen after Philips Electronics /quotes/comstock/13*!phg/quotes/nls/phg (PHG 31.86, -1.67, -4.98%)   /quotes/comstock/24s!e:phia (NL:PHIA 22.88, -1.01, -4.21%)  delivered a cautious outlook on fourth-quarter revenues.

The U.S. dollar was on the rise, with the dollar index /quotes/comstock/11j!i:dxy0 (DXY 77.02, -0.02, -0.03%) , a measure of the U.S. unit against a basket of major currencies, up 0.4% at 77.366. The euro /quotes/comstock/21o!x:seurusd (EURUSD 1.3977, +0.0003, +0.0215%)  fell 0.% against the dollar to trade at $1.3901. The dollar slipped 0.1% versus the yen /quotes/comstock/21o!x:susdjpy (USDYEN 81.1600, -0.2400, -0.2948%) to trade at ¥81.29.

The dollar fell sharply versus most major currencies early last week as investors dumped the currency on rising expectations the U.S. Federal Reserve will move at its November policy meeting to resume asset purchases as part of its quantitative-easing program. Expectations for a boost to liquidity helped lift equities and increase overall risk appetite.

A speech by Fed Chairman Ben Bernanke on Friday, however, appeared to leave markets disappointed. Bernanke said there was a case for more action by the Fed but offered few details on how additional measures may be implemented.

Gold futures lost ground as the dollar strengthened, with December futures losing $8.60 to trade at $1.363.40 an ounce in electronic trade.

Oil futures were up 34 cents to $81.58 a barrel in recent action.

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

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NYSE Arca Morning Update - 08:30:00 ET

NYSE Arca Morning Update for Monday, Oct 18, 2010 :

STOCKS TRADING ON NYSE Arca AT A PRICE 15% OR MORE AWAY FROM
THE PREVIOUS TRADE DAY'S CONSOLIDATED CLOSE PRICE (AS OF 08:30:00 ET)

Stock Friday's Close Current Price Pct Change Current NYSE ARCA Vol
AGAM $14.70 $20.65 40.4% 4,300
MEDQ $11.61 $7.19 (38.1%) 4,175
ISTA $4.48 $5.42 21.1% 10,535
KWK $12.60 $14.56 15.6% 73,647


10 MOST ACTIVE STOCKS ON NYSE ARCA AS OF 08:30:00 ET

BASED ON DOLLARS TRADED: | BASED ON SHARES TRADED:
Stock $ Volume Price PctChg | Stock Share Vol Price PctChg
SPY $77,351,978 $117.71 ( 0.0%) | C 11,114,200 $4.04 2.0%
AAPL $76,000,038 $319.71 1.5% | BAC 1,075,872 $12.04 0.5%
C $44,490,941 $4.04 2.0% | SPY 658,393 $117.71 ( 0.0%)
IWM $15,966,198 $70.47 0.2% | AAPL 238,992 $319.71 1.5%
BAC $12,901,019 $12.04 0.5% | FAZ 232,013 $13.01 ( 0.6%)
GLD $12,363,310 $133.10 ( 0.4%) | IWM 227,100 $70.47 0.2%
QQQQ $10,445,745 $51.53 0.1% | ALU 220,000 $3.66 ( 0.3%)
GOOG $9,659,577 $601.94 0.0% | PIP 214,106 $3.51 10.9%
SSO $3,797,046 $41.85 0.1% | QQQQ 203,216 $51.53 0.1%
BHP $3,770,266 $81.32 ( 1.3%) | STX 130,584 $16.73 7.9%


Price changes may be affected by symbol splits and dividends.

Consolidated close price is the last print (excluding prints with trade
conditions) prior to 4PM ET.

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