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U.S. stock futures dip as crude resumes rise

Thu Feb 2, 2006 5:56 AM ET
LONDON, Feb 2 (Reuters) - U.S. stock futures slipped on Thursday with crude prices ticking back up towards $67 a barrel and as investors stayed cautious before a key U.S. jobs report on Friday.

By 1045 GMT, U.S. stock futures were showing losses of between 0.3 and 0.4 percent for the three main indexes <SPH6> <DJH6> <NDH6>.

Sentiment on Wall Street may pick up later however, with a raft of top companies expected to report substantial rises in earnings including Amazon.com (AMZN.O: Quote, Profile, Research) and Whirlpool Corp (WHR.N: Quote, Profile, Research).


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U.S. stock futures fall amid earnings worries
Thu Feb 2, 2006 7:03 AM ET
By Vivianne Rodrigues

NEW YORK, Feb 2 (Reuters) - U.S. stock futures fell, indicating a lower market opening on Thursday, amid mixed earnings reports and as investors awaited key jobs data on Friday.


Diversified manufacturer Tyco International Ltd. (TYC.N: Quote, Profile, Research) reported lower quarterly profit on Thursday on weakness in its health-care and fire and security divisions.[ID:nWEN9579]

Appliance maker Whirlpool Corp. (WHR.N: Quote, Profile, Research) said fourth-quarter profit rose as it raised prices and benefited from a lower tax rate.[ID:nWEN9580]

Investors may also focus on Starbucks Corp. (SBUX.O: Quote, Profile, Research). The coffee chain jumped nearly 6 percent to $33.18 in after-hours trading on Wednesday after it reported forecast-beating earnings and increased its 2006 profit target.

Other companies expected to report on Thursday include cable TV operator Comcast Corp. (CMCSA.O: Quote, Profile, Research) and online retailer Amazon.com Inc. (AMZN.O: Quote, Profile, Research)

Standard & Poor's 500 index futures <SPH6> were down 4.70 points, below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Nasdaq 100 index futures <NDH6> were down 6.50 points, and Dow Jones industrial average futures <DJH6> were down 41 points.

"Earnings have been mixed, and most companies have been warning that the first quarter is going to be far from stellar," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "That, combined with a Fed that may still keep hiking rates, is raising the red flag for many investors."

Concerns before Friday's January nonfarm payrolls figures are also a factor, with investors looking for clues which could influence interest-rate policy after the Federal Reserve on Tuesday hinted more rate hikes might be needed.

On Thursday a Labor Department report is likely to show initial claims for unemployment benefits rose to 295,000 in the week ended Jan. 28, according to a Reuters poll. The figures are due at 8:30 a.m. (1330 GMT)

Stocks rallied on Wednesday after stronger-than-expected profit from aerospace company Boeing Co. (BA.N: Quote, Profile, Research). The Dow Jones industrial average <.DJI> was up 89.09 points, or 0.82 percent, at 10,953.95. The Standard & Poor's 500 Index <.SPX> was up 2.38 points, or 0.19 percent, at 1,282.46. The Nasdaq Composite Index <.IXIC> was up 4.74 points, or 0.21 percent, at 2,310.56.



U.S. stocks rallied on Wednesday after stronger profits than expected from aerospace company Boeing Co. (BA.N: Quote, Profile, Research) among others overshadowed Google Inc.'s (GOOG.O: Quote, Profile, Research) first earnings shortfall as a public company, which had hit the market earlier.

"The quality of earnings remains good with star-studded performances from Boeing and Time Warner, which more than caught the eye," said David Buik at Cantor Index in London.

"The futures markets look as though they want to pause and reflect and maybe take a bit money off the table."

Starbucks Corp. (SBUX.O: Quote, Profile, Research) is set to rise in regular trade, having jumped nearly 6 percent to $33.18 on the Inet electronic brokerage system after the coffee chain reported forecast-beating earnings and increased its 2006 profit target.

Crude oil futures <CLc1> edged up because of intensifying tension over Iran's nuclear programme, but energy stocks may not feel the benefit after European oils fell following Royal Dutch Shell's (RDSa.L: Quote, Profile, Research) results which failed to inspire.

"It may be that the energy stocks follow in the wake of the slightly negative performance of oil stocks in Europe this morning," Buik added.

Weekly U.S. government data showing rising crude, gasoline and heating oil inventories helped drive crude futures prices lower on Wednesday.

Jitters before Friday's January non-farm payrolls figures are also a factor, with investors looking for clues which could influence interest rate policy after the Federal Reserve on Tuesday hinted more rate hikes might be needed.

The dollar hit seven-week highs versus the yen and three-week highs against the euro on expectations of a strong U.S. monthly jobs report and thus further Fed tightening.

The Dow Jones industrial average <.DJI> closed up 89.09 points, or 0.82 percent, at 10,953.95 on Wednesday. The Standard & Poor's 500 Index <.SPX> was up 2.38 points, or 0.19 percent, at 1,282.46. The Nasdaq Composite Index <.IXIC> was up 4.74 points, or 0.21 percent, at 2,310.56.