MarketWatch.com - Pre-Market Indications

Wednesday, January 5, 2011

Indications: U.S. futures temper retreat on ADP jobs data

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By Kate Gibson and Simon Kennedy, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures lightly pared modest losses Wednesday after a private-sector employment report proved far better than anticipated, offering an upbeat spin on the labor front before Friday’s all-important nonfarm-payrolls figures.

“The labor market is clearly improving,” Peter Boockvar, equity strategist at Miller Tabak noted in an email, calling the data “a blowout to the upside.”

Stock-index futures eased back somewhat on modest losses after the ADP Employer Services report found the addition of 297,000 jobs in the private sector in December. The payrolls processor had been expected to report an increase of 100,000 jobs, according to economists polled by Dow Jones Newswires. See more on leap in private-sector hiring for December.

Down more than 30 points ahead of the report, futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,593, -26.00, -0.22%)  were lately off 27 points to 11,592 and S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,261, -4.20, -0.33%)  fell 4 points to 1,261.3.

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Futures for the Nasdaq 100 index /quotes/comstock/21m!f:nd\h11 (NDH11 2,241, -5.00, -0.22%)  were down 5 points at 2,240.5.

The moves came after a mixed end to trading on Tuesday, when the release of minutes from the Federal Reserve’s December policy meeting helped the Dow /quotes/comstock/10w!i:dji/delayed (DJIA 11,691, +20.43, +0.18%)  close 20 points higher, while the Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 2,681, -10.27, -0.38%)  and S&P 500 /quotes/comstock/21z!i1:in\x (SPX 1,270, -1.67, -0.13%)  both edged lower.

The weakness for stock futures Wednesday is most likely just a cooling-off after a strong performance for stock markets over the last month, said Mike Lenhoff, chief strategist at Brewin Dolphin.

“Markets are buying into a rosy-scenario point of view,” Lenhoff said, adding that if equities do fall Wednesday then losses are likely to be fairly muted.

Also on the economic front, the December ISM non-manufacturing index is due at 10 a.m. Eastern. Economists polled by MarketWatch are expecting a modest improvement, to 55.6% from 55% in November.

Gold futures were off $2.10 at $1,376.7 an ounce in electronic trading, having fallen heavily on Tuesday amid optimism over the global economic outlook. See Metals Stocks.

Among companies in focus Wednesday, Family Dollar Stores Inc. /quotes/comstock/13*!fdo/quotes/nls/fdo (FDO 49.31, -0.97, -1.93%)  reported first-quarter earnings of 58 cents a share, while analysts polled by FactSet Research had, on average, expected earnings of 61 cents a share.

Walgreen Co. /quotes/comstock/13*!wag/quotes/nls/wag (WAG 39.65, +0.33, +0.84%) , the giant pharmacy chain, reported on December sales, a day before most retailers are scheduled to.

Shares of Mosaic Co. /quotes/comstock/13*!mos/quotes/nls/mos (MOS 75.00, -1.25, -1.64%)  rose in premarket trading after the fertilizer producer late Tuesday reported second-quarter sales and earnings that were both comfortably ahead of market expectations.

European stock markets dropped Wednesday, giving back some of the gains they made in the previous two sessions, with the French CAC 40 index /quotes/comstock/30t!i:px1 (FR:PX1 3,876, -40.45, -1.03%)  falling 1.5% in midday action.

Asian markets closed mostly lower overnight. Japan’s Nikkei 225 Average /quotes/comstock/11b!i:ni225 (JP:NI225 10,381, -17.33, -0.17%)  ended the session down 0.2%.

Kate Gibson is a reporter for MarketWatch, based in New York. Simon Kennedy is the City correspondent for MarketWatch in London.

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