MarketWatch.com - Pre-Market Indications

Monday, January 10, 2011

Indications: U.S. futures drop ahead of Alcoa results

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By Polya Lesova, MarketWatch

LONDON (MarketWatch) â€" U.S. stock futures dropped following declines in Asian and European markets, with aluminum giant Alcoa Inc. set to kick off the fourth-quarter earnings season after the close of trading Monday.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,578, -41.00, -0.35%)  fell 40 points to 11,579 and S&P 500 index futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,263, -4.80, -0.38%)  slipped 5.5 points to 1,262.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\h11 (NDH11 2,267, -6.50, -0.29%)  dropped 6.75 points to 2,266.20.

The blue-chip Dow index /quotes/comstock/10w!i:dji/delayed (DJIA 11,675, 0.00, 0.00%)  gained 0.8% last week, finishing higher for a sixth straight week.

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Most European and Asian stock markets posted losses on Monday, souring sentiment ahead of the Wall Street open.

“We kick off earnings season tonight and everyone is going to be looking at Alcoa,” said Peter Cardillo, chief market economist at Avalon Partners Inc. in New York. “We don’t have any economic news. The focus is going to be on earnings and what’s happening in Europe. All eyes will be on Portugal.”

Alcoa /quotes/comstock/13*!aa/quotes/nls/aa (AA 16.42, +0.06, +0.37%) is expected to report fourth-quarter profit of 18 cents a share, according to a FactSet Research survey of analysts.

In Europe, meanwhile, equities declined as sovereign-debt concerns escalated following weekend reports that Portugal is being pressured to ask for a bailout. Last year, debt-laden Greece and Ireland requested financial aid from international lenders. Fears are growing that Portugal and even Spain could be next in line.

The Stoxx Europe 600 index /quotes/comstock/22c!sxxp (ST:STOXX600 279.22, -1.80, -0.64%)  fell 0.7% in intraday trading. The PSI 20 index slipped 1.8% in Lisbon and the IBEX 35 dropped 1.1% in Madrid.

U.S.-listed shares of Spain’s Banco Santander /quotes/comstock/13*!std/quotes/nls/std (STD 9.92, -0.21, -2.07%)   /quotes/comstock/06x!e:san (ES:SAN 7.49, -0.11, -1.46%)  slipped 2% in premarket trading.

Deal activity

Deal activity intensified on Monday. U.S. chemicals giant DuPont /quotes/comstock/13*!dd/quotes/nls/dd (DD 49.76, -0.22, -0.44%)  said it will acquire Denmark’s Danisco, an enzyme and specialty-food-ingredients company, in a $6.3 billion deal. DuPont will pay $5.8 billion in cash and assume $500 million of Danisco net debt. Shares of Danisco soared 25% in Danish trading.

Separately, Duke Energy /quotes/comstock/13*!duk/quotes/nls/duk (DUK 17.79, +0.05, +0.28%)  and Progress Energy Inc. /quotes/comstock/13*!pgn/quotes/nls/pgn (PGN 44.72, +0.82, +1.87%)  confirmed that they will merge in a stock-for-stock deal. The combined company, to be called Duke Energy, will be the country’s largest utility, with $37 billion in market capitalization.

Shares of Progress Energy rose 1.7% in premarket trading.

Elsewhere in the energy sector, U.S.-listed shares of oil giant BP PLC /quotes/comstock/13*!bp/quotes/nls/bp (BP 46.08, -0.15, -0.32%)   /quotes/comstock/23s!a:bp. (UK:BP. 484.00, -8.50, -1.73%)  fell 2.3% on news that the Trans-Alaska Pipeline System was shut down over the weekend after a leak was discovered at a pumping station. As a result, BP and other companies have stopped 95% of production on the North Slope.

Crude futures, meanwhile, gained as the pipeline shutdown triggered worries over a near-term disruption to oil supplies. February crude futures rose 53 cents to $88.56 a barrel in electronic trading on Globex after hitting an intraday high of $89.98 a barrel earlier.

Gold futures were little changed at $1,368 an ounce.

In the currency markets, the greenback was mostly higher against its major rivals, with the dollar index /quotes/comstock/11j!i:dxy0 (DXY 81.09, +0.08, +0.10%)  gaining 0.2% to 81.139.

Asian markets finished mostly lower overnight, with the Shanghai Composite index dropping 1.7%. In economic news, China reported a narrower-than-expected $13.1 billion trade surplus for December .

Polya Lesova is chief of MarketWatch’s London bureau.

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