WSJ: U.S. Stock Futures Decline as Investors Await Earnings
By William L. Watts
U.S. stock-index futures pointed to a lower start for Wall Street on Monday, with markets following Europe's lead as investors await a meeting of euro-zone finance ministers and the launch of earnings season.
Futures on the Dow Jones Industrial Average recently fell 62 points to 12665. S&P 500 futures declined 6.3 points to 1345.50, while Nasdaq 100 futures lost 7.5 points to 2601.50.
European equities traded in negative territory as Spanish government bond yields rose further into crisis territory ahead of a meeting of euro-zone finance ministers later Monday.
Spain's 10-year government bond yield pushed back above the 7% level, which is seen as potentially unsustainable.
The Stoxx Europe 600 index was down 0.4% in recent trade.
Meanwhile, a lackluster round of U.S. jobs data Friday left investors fretting that while growth remains slow, the labor market isn't weak enough to prompt a third round of quantitative easing--known in market jargon as QE3--by the Federal Reserve.
The Labor Department said June nonfarm payrolls rose by 80,000, coming in short of expectations for a rise of 100,000. The unemployment rate held steady at 8.2%.
"As we suggested on Friday, a slightly weaker payrolls number was likely to be the worst-case realistic scenario as it would probably leave us in QE3 limbo. In the end this is broadly what we saw with the S&P 500 closing" down 0.9% on Friday, said James Reid, strategist at Deutsche Bank in London.
"With limited U.S. data this week there won't be much new information on offer to change anyone's minds," he said, in a research note. The Fed is scheduled to release minutes of its last policy meeting later this week.
Data and Earnings
The economic calendar is light Monday, with May consumer credit data set for release at 3 p.m. EDT.
Earnings season will get under way after the closing bell, with aluminum producer Alcoa Inc. (AA) expected to post profit of five cents a share on revenue of $5.83 billion, according to the average estimate of analysts polled by FactSet.
Second-quarter earnings for companies in the S&P 500 are expected to post a 5.8% year-over-year rise, according to Thomson Reuters. But after stripping out Bank of America Corp. (BAC), which saw results last year hit by the settlement of a mortgage lawsuit, index earnings are expected to be up only 0.7%, according to the research firm.
U.S. stocks ended lower on Friday, dragged down by the June jobs data. The Dow fell 124.2 points to end at 12772.47, posting a 0.8% loss for the week. The S&P 500 fell 12.90 points to settle at 1354.68, off 0.6%, for the week, while the Nasdaq Composite Index closed 38.79 points lower at 2937.33.
Nymex crude-oil futures rose 31 cents to trade at $84.76 a barrel in electronic trade.
Gold futures rose $3 to $1581.90 an ounce.
The dollar index, which measures the U.S. unit against a basket of six major rivals, fell 0.1% to 83.31. The euro was little changed versus the dollar at $1.2284. The U.S. unit changed hands at 79.57 yen, down 0.1%.
Write to William L. Watts at AskNewswires@dowjones.com
Among the companies with shares expected to actively trade in Monday's session are Amerigroup Corp. (AGP), WellPoint Inc. (WLP), Sirius XM Radio Inc. (SIRI) and FX Alliance Inc. (FX).
Health-benefits provider WellPoint agreed to acquire the managed-care company Amerigroup in a roughly $4.46 billion cash deal in an effort to expand its presence in the Medicaid space. Amerigroup holders will receive $92 a share, a 43% premium to Friday's closing price. Amerigroup shares trading 38% higher premarket at $89.07, while WellPoint shares were trading about 4% higher at $62.30.
Sirius XM raised its full-year revenue and subscriber growth guidance as the satellite-radio operator continues to expand its subscriber base. Sirius XM now expects revenue of $3.4 billion for the year, up from the $3.3 billion it projected in May. The company also expects to grow net new subscribers by 1.6 million, versus its earlier prediction of 1.5 million new subscribers. Shares were up 3.9% premarket to $2.13.
Thomson Reuters Corp. (TRI) has agreed to buy electronic currencies trading platform FX Alliance in a move that will see the two trading platforms merge to create a trading venue where the largest banks in the space will interact with corporate clients and high-frequency traders. Thomson Reuters will acquire all of FX Alliance for $22 a share in cash and the deal is expected to close in the third quarter of this year. FX Alliance shares were trading 39% higher at $21.90 premarket.
Youku Inc. (YOKU) signed a multiple-year agreement with NBCUniversal International Television Distribution for the video-on-demand rights in China to NBCUniversal's feature films. The films will be available for on-demand viewing through Youku Premium. The China Internet television company's shares traded at $21.30 premarket, up 5%.
Boeing Co. (BA) received a firm order for 60 737 Max 8 and 15 737 Max 9 airplanes from Air Lease Corp. (AL). The order, with a list-price value of $7.2 billion, represents the first 737 Max order by a leasing company. Air Lease expects to take its first Max in 2018. Boeing shares up 1.4% at $74.70 premarket.
Yahoo Inc. (YHOO) and Facebook Inc. (FB) have reached a settlement ending patent litigation between the firms, drawing an end to a nasty but ultimately short-lived dispute that had roiled Silicon Valley. The agreement is intended to further expand partnership ties between the firms that predate the litigation, and doesn't involve any payments. Facebook shares trading 1.4% higher at $32.18, while Yahoo shares were up 12 cents to $15.90.
AT&T Inc. (T) said about 7,000 core wireline employees have failed to ratify a one-year contract extension and said it will continue to work with their union to reach an agreement. Shares were trading at $35.40 premarket, up four cents.
Watchlist:
Baker Hughes Inc. (BHI) said the number of drilling rigs actively exploring or developing oil in June rose 4.5% from May and for the first time since 1990 the global count included Iraq, which helped offset the month-to-month decline in U.S. rigs. The oilfield-services company said the world-wide rig count rose to 3,484 in June from 3,335 rigs in May, and increased 7% from 3,257 rigs a year earlier.
Box Ships Inc. (TEU) said it is withdrawing its public offering of 700,000 units, which was part of an effort to finance the acquisition of two containerships. The Athens shipping company, which specializes in transporting containers, didn't give a reason for withdrawing the offering, which consisted of preferred shares and warrants. The company wasn't immediately available for comment.
Campbell Soup Co. (CPB) agreed to acquire natural-foods company Bolthouse Farms from Madison Dearborn Partners LLC for about $1.55 billion, expanding the Campbell's presence in the growing packaged fresh-foods category.
Johnson & Johnson's (JNJ) Janssen unit said the U.S. Food and Drug Administration has assigned a priority review designation to its supplemental new drug applications filed in May for its anticoagulant Xarelto. The priority review status means the drug will likely be reviewed in six months rather than the standard 10. Janssen also said it is withdrawing its supplemental new drug application for Xarelto's use in reducing the risk of stent thrombosis in patients with acute coronary syndrome, and plans to resubmit this later.
Commodity supply chain company MFC Industrial Ltd. (MIL) agreed to take over Compton Petroleum Corp. (CMT.T) in a deal worth $33 million Canadian dollars (US$32.3 million) in an effort to expand its commodities platform. MFC Industrial agreed to pay $1.25 for each of Compton's 26.4 million shares outstanding. Compton is a developer and producer of natural gas, natural gas liquids and crude oil in Canada.
NiSource Inc. (NI) agreed to two joint ventures with private oil and gas exploration company Hilcorp Energy to support natural gas production and to develop the hydrocarbon potential in the Utica Shale region of northeast Ohio and western Pennsylvania. NiSource and Hilcorp will construct new gathering pipeline infrastructure and natural gas liquids processing facilities to support natural gas production. The first phase of the venture's investment program, amounting to about $300 million, is planned for later this year.
Qlik Technologies Inc. (QLIK) cut its second-quarter revenue guidance, citing challenging macroeconomic conditions, especially in Europe. The software company now expects second-quarter revenue of $84 million to $86 million, down from its April estimate of $91 million to $96 million. Qlik also cut the high end of its earnings guidance by a penny, now projecting per-share earnings of one to two cents.
Southwest Airlines Co.'s (LUV) June traffic stayed flat from a year ago, moderating after three straight months of year-over-year declines. The airline said its capacity eased 0.7% in June from a year earlier and its load factor, or the percentage of seats filled, edged up to 84.4% from 83.9%. Southwest estimated that passenger revenue per available seat mile rose 6% during June.
Spectrum Pharmaceuticals Inc. (SPPI) has again extended its tender offer for fellow biopharmaceutical company Allos Therapeutics Inc. (ALTH), so that the companies can continue cooperating with the Federal Trade Commission. It also said the European Commission has recommended against the approval of Allos's peripheral T-cell lymphoma treatment Folotyn.
Stryker Corp. (SYK) has voluntarily recalled two metal devices used in hip implant surgeries, citing risks associated with corrosion.
Write to Melodie Warner at melodie.warner@dowjones.com
