MW: Stock futures edge down; focus returns to earnings season
Analysts continue to debate rigor of stress tests; Deutsche Bank shares fall
By Polya Lesova, MarketWatch
FRANKFURT (MarketWatch) -- U.S. stock futures edged lower on Monday after the strong gains posted last week, as traders focused on second-quarter earnings season now that European bank stress-test results are out of the way.
S&P 500 futures dropped 3.10 points to 1,097.50 and Nasdaq 100 futures declined 4 points to 1,869.70.
Futures on the Dow Jones Industrial Average fell 12 points to 10,374.
U.S. stocks ended with strong gains on Friday, buoyed by news that the majority of European banks have passed eagerly awaited stress tests.
The Dow (DJIA 10,425, +102.32, +0.99%) rose 1% in the session and gained 3.2% for the week.
"As far as the U.S. is concerned, the key thing is still the earnings," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London. "By the end of the week, two thirds of the S&P 500 would have reported. The results should be quite good."
"The concerns people have had about loss of recovery momentum haven't been evident in these earnings," Lenhoff said.
Shares on the move include Chico's FAS (CHS 9.85, -0.39, -3.81%) , down nearly 8%. Shares were reportedly cut to conviction sell from sell at Goldman Sachs.
Cigarette manufacturer Lorillard Inc. (LO 76.30, +0.39, +0.51%) reported second-quarter earnings per share of $1.73 compared to $1.71 a share in the same period a year ago. After the market closes, technology firm Sanmina-SCI Corp. (SANM 15.16, +0.52, +3.55%) will release quarterly results.
Gilead Sciences Inc. (GILD 33.25, -0.18, -0.54%) announced it will buy back at least $1 billion of its common stock, and fund the purchase by issuing $2.2 billion in convertible senior notes.
Accel-KKR, a technology-focused private equity firm, said Monday it agreed to sell iTradeNetwork to Roper Industries (ROP 62.01, +1.89, +3.14%) for $525 million in cash.
On the economic front, the home builders' index for June will be released at 10 a.m. Eastern time.
European shares edge down
The Stoxx Europe 600 index (ST:SXXP 254.93, -1.04, -0.41%) reversed opening gains to trade down 0.3%. Germany's DAX stock index (DX:DAX 6,139, -27.47, -0.45%) fell 0.2%.
Shares of Deutsche Bank AG (DB 63.70, -0.84, -1.30%) (DE:DBK 49.31, -0.50, -1.00%) slipped 1.1% after it and several other German banks didn't disclose the full details of their sovereign-debt holdings. The Financial Times reported that the German financial regulator had not pressured banks to make a full disclosure of their positions. Read more on banks.
Analysts continued to debate the credibility and rigor of the stress tests.
"One can question the merits of the outcome, but it's largely as anticipated," Lenhoff said. "It would have been most unlikely to have an outcome showing the European banking system in dire straits. The one source of comfort has to do with the fact that the formality of the exercise is over."
In London trading, shares of BP PLC (BP 37.97, +1.11, +3.01%) (UK:BP. 408.20, +9.60, +2.41%) gained 2.2% following media reports suggesting that Chief Executive Tony Hayward is negotiating his departure with the firm's board of directors.
Robert Dudley is tipped to succeed Hayward as CEO, according to reports. Dudley, a BP managing director and former CEO of Russia's TNK-BP, took over day-to-day control of the company's cleanup efforts in the Gulf of Mexico in June.
BP said Monday that no final decision has been made on any management changes. Its board will hold a meeting this evening ahead of the company's announcement of second-quarter results on Tuesday. See more on BP.
Also in the energy sector, shares of Tullow Oil (UK:TLW 1,225, +46.00, +3.90%) rose 3.7% after the firm announced it has discovered a major new oil field off the coast of Ghana.
In the currency markets, the dollar index (DXY 82.28, -0.18, -0.22%) , which tracks the performance of the greenback against a basket of other major currencies, edged down 0.2% to 82.273. The euro (CUR_EURUSD 1.2934, +0.0033, +0.2558%) gained 0.3% to $1.2938.
September crude-oil futures fell 51 cents to $78.47 a barrel in electronic trading on the New York Mercantile Exchange.
