U.S. Stock Futures Edge Up As Earnings Season Begins -- FEC

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Date Posted: 05:58:15 07/10/12 Tue
Author: 10/07/2012 8:40PM =Alcoa (Sidewalk Kelly Carkson)
Subject:

U.S. Stock Futures Edge Up As Earnings Season Begins

U.S. Stock Futures Edge Up As Earnings Season Begins
10/07/2012 8:40PM

By William L. Watts

FRANKFURT (MarketWatch) -- U.S. stock-index futures traded higher Tuesday as investors digested a smaller-than-expected fall in earnings from industrial bellwether Alcoa Inc. as earnings season gets under way and investors wrestle with fears of a slowing global and U.S. economy.

Futures on the Dow Jones Industrial Average rose 45 points, or 0.4%, to 12,730.

S&P 500 index futures gained 4.1 points, or 0.3%, to 1,353.30, while Nasdaq 100 futures advanced 8.5 points, or 0.3%, to 2,614.50.

Alcoa (AA), an industrial bellwether whose reports are seen as marking the unofficial start of earnings season each quarter, late Monday posted earnings from continuing operations of 6 cents a share, down from 32 cents in the same period last year. The outcome, however topped a forecast of 5 cents produced by a Thomson Reuters survey of Wall Street analysts.

"This could be a tricky month for investors as the earnings season proceeds," said David Morrison, senior market strategist at GFT in London. "Corporate guidance has been increasingly negative, and so expectations have been massaged lower. However, the big question is if they are now low enough?"

The impact of the euro zone's long-running debt crisis must be factored into results by U.S. multinationals, he noted, while investors remain "relatively happy" to buy and hold stocks on expectations for further interventions by global central banks.

Asian shares ended lower after trade data showed Chinese imports last month were weaker than expected, fanning worries about a slowdown.

Data released Tuesday showed China's imports grew 6.3% in June from a year earlier, versus expectations for a rise of 11.3% and down from a 12.7% gain in May. Exports grew 11.3%, beating a forecast for a 9% rise but down from a 15.3% jump in May.

"We infer from above-expected export growth and below-expected import growth that Chinese producers are taking market share in third-country export markets from their Korean and Taiwanese competitors, but the resulting activity is not enough to offset weak domestic spending," wrote ING economist Tim Condon.

European markets erased early losses to turn higher after a round of stronger-than-expected U.K. manufacturing output and industrial production for May. The Stoxx 600 Europe index rose 1%.

A meeting of euro-zone finance ministers in Brussels stretched into the early hours of Tuesday morning. As expected, ministers agreed to loosen Spain's deficit targets and approved the first tranche of a bailout aimed at the country's struggling banking sector.

The U.S. economic calendar remains light, with the June small-business index produced by the National Federation of Independent business set for release at 7:30 a.m. EDT.

Shares of WD-40 Co. (WDFC) were expected to be in focus after the company late Monday said it expects full-year European sales to come in flat or lower than last year due to continued volatility in both the oil and European markets.

Advanced Micro Devices Inc. (AMD) is also expected to be in focus after it pre-announced second-quarter results, revealing that it expects revenue to fall short of previous estimates.

U.S. stocks lost ground for a third consecutive session Monday, with the Dow (DJI) dropping 36.18 points to 12,736.29. The S&P 500 (SPX) declined 2.22 points to 1,352.46, while the Nasdaq Composite Index (RIXF) shed 5.56 points to 2,931.77.

Nymex crude-oil futures lost 46 cents to trade at $85.53 a barrel in electronic trade after Norway's government moved to avert an industrywide lockout by halting a strike by petroleum workers and imposing arbitration.

Gold futures rose $4.20 to $1,593.30 an ounce.

The dollar index (DXY), which measures the U.S. unit against a basket of six major rivals, fell 0.2% to 83.01.

The euro was little changed at $1.2317 versus the dollar. The U.S. currency fell 0.2% against the Japanese yen to trade at Y79.38.

-William L. Watts; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires

July 10, 2012 06:40 ET (10:40 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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