MarketWatch.com - Pre-Market Indications

Friday, January 14, 2011

Indications: U.S. stock futures point to soft open

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By William L. Watts, MarketWatch

LONDON (MarketWatch) â€" U.S. stock futures traded mostly lower Friday, as investors awaited a raft of economic data and digested China’s decision to again raise the amount of money that banks must keep on reserve, while shrugging off stronger-than-expected earnings from J.P. Morgan Chase & Co. and Intel Corp.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,630, -53.00, -0.45%)  declined 47 points to 11,636, while S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,276, -5.00, -0.39%)  fell 5.3 points to 1,276.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\h11 (NDH11 2,301, -2.25, -0.10%)  slipped 3 points to 2,299.75.

The People’s Bank of China on Friday boosted its reserve-requirement ratio for banks by half a percentage point. The ratio, which determines the amount of money that lenders must keep on reserve, has been lifted numerous times over the past year. Read more about China’s move.

Asia's week ahead

China will announce inflation and economic growth figures, and Australian mining giants will release quarterly reports.

The move put pressure on metals prices and undercut mining stocks in Europe, and it also appeared to impact U.S. stock futures, which were already trading with a soft tone, said Michael Hewson, market analyst at CMC Markets.

Although China had telegraphed another possible action on reserve requirements, investors seemed to factor in a smaller tightening of about a quarter-point, he said.

Banking giant J.P. Morgan Chase /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 44.45, -0.26, -0.58%)  said its fourth-quarter profit rose 47% to $4.8 billion, or $1.12 a share, on revenue of $26.1 billion. On average, analysts had expected net income of $1 a share on revenue of $24.2 billion, according to a survey by FactSet Research. Read about J.P. Morgan’s results.

After Thursday’s closing bell, Intel /quotes/comstock/15*!intc/quotes/nls/intc (INTC 21.29, -0.01, -0.06%)  reported a 48% jump in fourth-quarter profit, driven by strong demand for server processors. Shares gained 2.1% in premarket activity Friday, with analysts citing the company’s strong forecast and a rise in projected capital spending, viewed as a sign of confidence in future demand. Read about Intel's results.

Investors will have plenty of economic data to pick through at 8:30 a.m. Eastern time.

Economists, on average, expect December retail sales to show a 0.8% increase, matching November’s rise, according to a MarketWatch survey. Excluding autos, sales are forecast to rise 0.7%, after a 1.2% gain in November.

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The December consumer-price index is expected to show a 0.5% rise after a 0.1% increase in November. Core CPI is seen rising 0.1%, matching November’s increase.

Later Friday, investors will see December industrial-production data and the University of Michigan’s gauge of January consumer sentiment.

“U.S. retail-sales figures are expected to show some growth for last month and the University of Michigan’s confidence indicator is also tipped to point higher, [but] with this already priced in, Wall Street could be left looking vulnerable,” said Anthony Grech, head of research at IG Index, in emailed comments.

On Thursday, U.S. stocks finished lower in the wake of disappointing economic data, with the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,732, -23.54, -0.20%)  slipping 0.2% to close at 11,731.90. The Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 2,735, -2.04, -0.07%)  declined 2.04 points to end at 1,283.76, while the S&P 500 /quotes/comstock/21z!i1:in\x (SPX 1,284, -2.20, -0.17%)  lost 2.2 points to finish at 1,283.76.

European stocks were mostly lower Friday, although Intel’s upbeat earnings boosted the region’s tech sector. Read more in Europe Markets.

Asian stocks finished mostly lower Friday, under pressure in the wake of Thursday’s lackluster data on U.S. weekly jobless claims. Read more about Asia markets.

The dollar rose slightly versus the euro /quotes/comstock/21o!x:seurusd (EURUSD 1.3361, +0.0001, +0.0075%)  in choppy trade Friday to trade at $1.3327, a gain of 0.1%. The euro rallied sharply versus the dollar Thursday after European Central Bank President Jean-Claude Trichet warned on inflation. Read about Trichet’s comments.

The dollar rose 0.3% versus the Japanese yen /quotes/comstock/21o!x:susdjpy (USDYEN 82.8100, +0.0200, +0.0242%)  to trade at 82.94 yen.

Gold futures /quotes/comstock/21e!f:gc\h11 (GCH11 1,363, -24.50, -1.77%)  fell $18.90 to $1.368.10 an ounce.

Nymex crude-oil futures /quotes/comstock/21n!f:cl\h11 (CLH11 91.39, -0.91, -0.99%)  declined $1.26 to change hands at $90.14 a barrel in electronic trade.

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

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