Futures slide on weak earnings

Markets are set for a lower open after disappointing results from Google and Microsoft.

By Benzinga Jul 19, 2013 8:56AM

zurbar age fotostockBy Matthew Kanterman


U.S. equity futures slid overnight after weak earnings reports from tech giants Microsoft (MSFT) and Google (GOOG). Both companies reported lower than expected top and bottom line results. (Microsoft owns and publishes Top Stocks, an MSN Money site.)


In other news, Detroit finally, after years of fiscal troubles, declared the nation's largest ever municipal bankruptcy. The move will allow the city to freeze pension payments and adjust measures such as standard of living increases to help plug budget holes.


Moody's upgraded its outlook on the U.S. government to stable from negative and maintained the U.S. at a Aaa rating. The firm noted that if the U.S. deficit does not get under control then this could prompt a downgrade.

  • S&P 500 futures fell 2.6 points to 1,678.00.

  • The EUR/USD was lower at 1.3103.

  • Spanish 10-year government bond yields fell 1 basis point to 4.65%.

  • Italian 10-year government bond yields fell 1 basis point to 4.4%.

  • Gold rose 0.21% to $1,288.20 per ounce.

Asian markets

Asian shares were lower overnight following the weak U.S. earnings after the bell, which are described in detail below. The Japanese Nikkei 225 Index declined 1.48% and the Topix Index fell 0.82%. In Hong Kong, the Hang Seng Index rose 0.08% while the Shanghai Composite Index declined 1.52% in China. Also, the Korean Kospi fell 0.22% and Australian shares lost 0.43%.


European markets

European shares were also lower overnight on very little news on the economic front as earnings sentiment weighed. The Spanish Ibex Index declined 0.62% and the Italian FTSE MIB Index fell 0.16%. Meanwhile, the German DAX fell 0.53% and the French CAC 40 Index lost 0.56% while U.K. shares declined 0.52%.


Commodities

Commodities were mixed overnight as oil pulled back from recent highs. WTI crude futures fell 0.19% to $107.83 per barrel and Brent crude futures declined 0.17% to $108.51 per barrel. Copper futures fell 0.43% to $311.80 per pound. Gold was higher and silver futures fell 0.12% to $19.37 per ounce.


Currencies

Currency markets were volatile overnight as the dollar retraced some losses from earlier in the overnight session. The EUR/USD was lower at 1.3105 and the dollar fell against the yen. Overall, the Dollar Index fell 0.07% on weakness against the pound, the yen, and the Swiss franc.


Earnings reported Thursday

Key companies that reported earnings Thursday include:

  • UnitedHealth (UNH) reported second quarter earnings per share (EPS) of $1.40 vs. $1.25 expected on revenue of $30.4 billion vs. $30.5 billion expected.

  • Verizon (VZ) reported second quarter EPS of $0.73 vs. $0.72 expected on revenue of $29.79 billion vs. $29.82 billion expected.

  • Microsoft (MSFT) reported fourth quarter EPS of $0.66 vs. $0.75 expected on revenue of $19.9 billion vs. $20.79 billion expected.

  • Google (GOOG) reported second quarter EPS of $9.56 vs. $10.79 expected on revenue of $14.11 billion vs. $14.42 billion.

  • Johnson Controls (JCI) reported third quarter EPS of $0.83 vs. $0.75 expected on revenue of $10.8 billion vs. $10.99 billion. The company also announced an asset sale and hinted at further sales to come in the future.

  • Union Pacific (UNP) reported second quarter EPS of $2.37 vs. $2.35 on revenue of $5.47 billion vs. $5.5 billion expected.

Premarket movers

Stocks moving in the premarket included:

  • Google (GOOG) shares fell 3.92% premarket on the earnings miss.

  • Microsoft (MSFT) shares fell 6.38% as it also missed earnings estimates.

  • Chipotle Mexican Grill (CMG) shares rose 5.34% premarket after reporting stronger than expected earnings and raising full year sales guidance.

  • Corelogic (CLGX) shares rose 0.86% premarket as the company acquired a set of assets from Bank of America (BAC), no terms disclosed.

Earnings

Notable companies expected to report earnings Friday include:

  • Honeywell (HON) is expected to report second quarter EPS of $1.21 vs. $1.25 a year ago on revenue of $9.702 billion vs. $9.435 billion a year ago.

  • Lab Corp. (LH) is expected to report second quarter EPS of $1.80 vs. $1.63 a year ago on revenue of $1.44 billion vs. $1.423 billion a year ago.

  • Schlumberger (SLB) is expected to report second quarter EPS of $1.10 vs. $1.05 a year ago on revenue of $11.12 billion vs. $1045 billion a year ago.

  • General Electric (GE) is expected to report second quarter EPS of $0.35 vs. $0.38 a year ago on revenue of $35.56 billion vs. $36.11 billion a year ago.

Economics

On the economics calendar Friday, there are no important data due out. Over the weekend, watch out for the Japanese upper house elections to set the tone for the overnight session heading into Monday's trading.

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