MarketWatch.com - Pre-Market Indications

Wednesday, April 6, 2011

Indications: U.S. stock futures slip before data, Fed minutes

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By Barbara Kollmeyer, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures pointed to a lower start for Wall Street on Tuesday, as investors took in news of China’s rate hike and awaited ISM services-sector data and the minutes of the most recent Federal Open Market Committee meeting.

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Futures for the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\m11 (DJM11 12,344, +17.00, +0.14%)   fell 28 points to 12,309, while those for the Standard & Poor’s 500 index /quotes/comstock/21m!f:sp\m11 (SPM11 1,329, +2.30, +0.17%)   lost 4 points to 1,325.10.

Futures for the Nasdaq 100 index /quotes/comstock/21m!f:nd\m11 (NDM11 2,326, +2.25, +0.10%)   fell 15.5 points to 2,325.

China’s central bank lifted base lending and deposit rates by a quarter-point, according to reports.

Peter Cardillo, chief market economist at Avalon Partners, said U.S. markets will focus less on China’s rate hike and more on economic data, the FOMC minutes and budget talks between top Democrats and Republicans. Read about Obama hosting budget talks.

“The market knows China has an inflation problem and that they’re hiking rates to combat it,” he said.

“I think we’re going to see a market that’s going to trade sideways early in the session until we get FOMC minutes out of the way,” said Cardillo, who added that higher-than-expected services-sector numbers could give stocks a bounce.

The Institute of Supply Management’s report on services-sector activity is due at 10 a.m. Eastern time, while the FOMC will release minutes from its March 15 meeting at 2 p.m. Eastern.

Before the open, shares of National Semiconductor Corp. /quotes/comstock/13*!nsm/quotes/nls/nsm (NSM 24.06, +9.99, +71.00%) surged 71% after Texas Instruments Inc. /quotes/comstock/13*!txn/quotes/nls/txn (TXN 34.69, +0.58, +1.70%)  said late Monday that it will buy the company for $6.5 billion in cash, or $25 a share. Read more on the TI deal.

Shares of Cubist Pharmaceuticals Inc. /quotes/comstock/15*!cbst/quotes/nls/cbst (CBST 29.01, +3.76, +14.89%)  jumped 17% in premarket trading. Late Monday, the company said it granted Teva Pharmaceuticals Industries Ltd. /quotes/comstock/15*!teva/quotes/nls/teva (TEVA 50.81, +0.77, +1.54%)  a license of its generic Cubicin antibiotic in the U.S.

KB Home /quotes/comstock/13*!kbh/quotes/nls/kbh (KBH 11.69, -0.51, -4.18%)  could be active as the company is due to release quarterly results before the market open.

Shares of Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 338.89, -2.30, -0.67%)  fell 1.5% in preopen trade on news that Nasdaq OMX Group Inc. /quotes/comstock/15*!ndaq/quotes/nls/ndaq (NDAQ 28.00, +0.56, +2.04%) plans to rebalance the Nasdaq 100 /quotes/comstock/10y!i:ndx (NDX 2,328, -6.67, -0.29%) , effective May 2. The Wall Street Journal reported that the rebalancing was driven partly by the rise in Apple’s shares, which have more than quadrupled in two years. The rebalancing will reduce the tech giant’s weighting in the index, which is now more than 20%.

On Monday, tech stocks lagged behind the wider market, with the Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 2,791, +2.00, +0.07%)  snapping a four-session winning streak. The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 12,394, -6.13, -0.05%)  rose 23.31 points, or 0.19%, to close at 12,400.03, its highest close since June 5, 2008.

On Tuesday, technology stocks were on the rise in mostly weaker European markets, as related stocks rose on the National Semi-Texas Instruments deal.

Meanwhile, Japanese stocks fell on signs that the country’s nuclear crisis could stretch out even further while car makers fell on worries that difficulty in sourcing parts from suppliers affected by the March 11 earthquake and tsunami could hurt production.

Shares of Toyota Motor Corp. /quotes/comstock/13*!tm/quotes/nls/tm (TM 77.63, -1.85, -2.33%)  fell 2.4% after the Associated Press reported that the car maker will temporarily close its North American plants owing to the parts shortage. Honda Motor Corp.’s /quotes/comstock/13*!hmc/quotes/nls/hmc (HMC 34.78, -1.06, -2.96%)  and Nissan Motor Co.’s /quotes/comstock/11i!nsan.y (NSANY 16.92, -0.44, -2.53%)  shares also fell.

Oil prices eased, with crude for May delivery /quotes/comstock/21n!f:cl\k11 (CLK11 108.12, -0.22, -0.20%)  off 73 cents to $107.75 a barrel after benchmark contracts hit new 2 ½-year highs Monday.

Gold for May delivery rose 30 cents to $1,432.80 an ounce.

The dollar firmed on news of China’s rate hike, gaining 0.4% against the euro at $1.4172, and adding 0.2% against the Japanese yen at ¥84.29.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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