Stock Futures Dip On Disappointing Fed, China Data

Date : 06/21/2012 @ 7:10AM
Source : Dow Jones News
Stock : Rite Aid Corp. (RAD)
Quote : 1.81  0.0 (0.00%) @ 8:37AM

Stock Futures Dip On Disappointing Fed, China Data

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U.S. stock-market futures pointed to a lower open for Wall Street as investors continued to express some disappointment that the Federal Reserve chose only to extend its bond-buying program, while weak China data also weighed on sentiment.

Futures for the Dow Jones Industrial Average fell 36 points to 12729, while those for the Standard & Poor's 500 index fell 3.5 points to 1347.20. Futures for the Nasdaq Composite fell 3.5 points to 2610.50.

Wall Street stocks finished mostly lower Wednesday, with the Dow Jones Industrial Average finishing down 12.94 points at 12824.39, after the Fed opted to extend its current bond-buying program but not expand it. The move was widely expected but disappointed some who had hoped the U.S. central bank would announce another round of quantitative easing.

The Fed also said it stood ready to take more action on the economy if needed.

"Market response to the Fed's latest move has been underwhelming--indeed, risk assets were more concerned with the large downward growth revision by the Fed, and then the weak Chinese PMI figures released overnight," said analysts at FxPro in emailed comments.

"Still, Bernanke has clearly signaled that QE3 will return should jobs fail to pick up, so that ought to placate the market to some extent," the analysts said.

Asia and European markets were weaker across the board, after China manufacturing activity dropped to a seven-month low, according to preliminary HSBC data.

A gauge of June business activity in the euro zone remained near the prior month's 35-month low, according to results of a preliminary Markit survey.

"It's not just the euro zone that is hampering investor sentiment at the moment, but the overall outlook for major economies such as China and U.S. is under question as well, with slowdown in hiring and weaker expected growth," said Khurram Ali, a broker at Valbury Capital, in a note to investors.

"Considering the risk-to-reward ratio at the moment, it would not be a surprise that investors prefer having cash in their portfolio [over] looking at major equity markets, even though some might consider them to be relatively cheap at these prices," Ali added.

Global markets are also awaiting results of the independent audit of Spanish banks, which is due later in Madrid. Borrowing costs have been falling for the past three days in Spain, partly due to hopes that bond buying by European bailout funds could be used to ease pressure on those costs for Italy and Spain.

The IBEX 35 index pulled back from a 1% loss to flat after an auction of government bonds raised more than expected.

On the economic calendar in the U.S., weekly jobless claims data are to be released by the Labor Department at 8:30 a.m. EDT. The Philadelphia Fed factory index for June, plus May existing-home sales and leading economic indicators are due for release at 10 a.m. EDT.

In other markets, crude oil for August delivery fell 76 cents to $80.70 a barrel, while gold for August delivery tumbled $15.50 to $1,600.10 an ounce.

The dollar firmed across the board as perceived riskier assets such as oil and stocks moved lower. The dollar index, which measures the dollar against a basket of six major currencies, rose to 81.587 from its level of 81.567 in late trading Wednesday.

On the corporate front, shares of Carmax Inc. (KMX), Rite Aid Corp. (RAD) and ConAgra Foods Inc. (CAG) could be in focus. Those companies are all due to report results ahead of the opening bell.

Write to Barbara Kollmeyer at


Among the companies with shares expected to actively trade in Thursday's session are Sun Healthcare Group Inc. (SUNH), Bed Bath & Beyond Inc. (BBBY) and Pozen Inc. (POZN).

Nursing home company Genesis HealthCare LLC will acquire Sun Healthcare Group, in a deal that values the company at $217 million and allows Genesis to strengthen its core business. Genesis will acquire Sun for $8.50 a share, a 38% premium over its closing price Wednesday. Sun shares jumped 35% to $8.28 after hours.

Bed Bath & Beyond's fiscal first-quarter profit improved 15%, topping estimates, as same-store sales and revenue continued to climb for the home-furnishings retailer. Shares sank 11% after hours to $65.88 as the company predicted downbeat second-quarter earnings and saw its margins slide.

Pharmaceutical company Pozen said the U.S. Food and Drug Administration disagreed with the company's preliminary review in assessing the bioequivalence of its delayed-release aspirin tablet, PA32540, to enteric-coated aspirin 325 mg. Shares fell 17% after hours to $6.21.

Eagle Bulk Shipping Inc. (EGLE) said it reached an agreement with a syndicate of its lenders, led by Royal Bank of Scotland Group PLC (RBS, RBS.LN). The deal allows the dry-bulk shipper to resolve all outstanding issues with its lenders and significantly improves its position amid an ongoing downturn in shipping markets, the company said. Shares climbed 23% to $3.68 after hours.

Key Energy Services Inc. (KEG) said it expects its second-quarter results to miss its prior expectations and also cut its full-year projections for U.S. revenue, pointing to lower-than-expected growth in liquid shale markets this year and a decline in natural gas prices. Shares slipped 6% to $9.20 after hours.

Red Hat Inc.'s (RHT) stronger-than-expected first-quarter earnings and sales aren't enough to soothe investors worried about macro challenges turning today's beat into tomorrow's miss. Susquehanna's Derrick Wood notes the software firm's investors haven't had guidance or color on how Europe will affect Red Hat's future earnings. Missing billings by about four percentage points suggests those fears have their root in the Old Country. Shares slid 9.75% to $50.99 after hours.


Apartment Investment & Management Co. (AIV) has commenced an offering of 11 million shares of its common stock to raise funds to redeem preferred stock.

Apogee Enterprises Inc. (APOG) swung to a fiscal first-quarter profit as the industrial-glass maker's margins strengthened and as its architectural segment continued to benefit from higher prices and volume growth. The company also raised its full-year earnings outlook.

BlackRock Inc. (BLK) said one of its founding partners, Susan Wagner, will retire as the money manager's vice chairman and will join its board of directors.

Clarcor Inc.'s (CLC) fiscal second-quarter earnings edged up 0.4%, despite weaker revenue, as the filter-and-packaging company saw lower expenses help results. Results missed expectations, and the company cut its full-year earnings and revenue guidance, noting it has experienced softer demand in several geographic and product markets amid continuing economic uncertainty.

Moody's Investors Service raised its outlook on Community Health Systems Inc. (CYH) to stable from negative, saying the hospital operator should maintain strong margins and good liquidity.

Standard & Poor's Ratings Services raised its outlook on Entergy Corp. (ETR) to stable from negative, pointing to improvements in the company's regulated utility business.

GenMark Diagnostics Inc.'s (GNMK) offering of 10 million shares of common stock priced at a 2.1% discount to Wednesday's closing price.

Trian Fund Management L.P. disclosed in a Securities and Exchange Commission filing that its chief executive, Nelson Peltz, turned down a seat on Ingersoll-Rand Co.'s (IR) board, after the company tried to impose restrictions on the investment fund.

Micron Technology Inc. (MU) extended its string of losses in its fiscal third quarter, hurt by pricing weakness in the flash-memory market.

Murphy Oil Corp. (MUR) has named Steve Cosse as its new president and chief executive, replacing David Wood who is retiring after 17 years at the oil producer.

Raymond James Financial Inc.'s (RJF) client assets under administration declined during May as concerns about Europe's economy led to weaker equities markets.

Sonic Corp. (SONC) swung to a better-than-expected fiscal third-quarter profit, after the drive-in restaurant company was saddled with debt-extinguishment costs a year earlier.

Steelcase Inc.'s (SCS) fiscal first-quarter earnings rose 76% as continued revenue growth in the office-furniture maker's Americas business offset declines in its Europe, Middle East and Africa segment.

Write to Nathalie Tadena at

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