Futures lower ahead of bank earnings
In focus this morning are major financial institutions' quarterly results and a slew of upcoming economic data.
U.S. equity futures slipped in early premarket trading Friday ahead of key earnings from U.S. banking giants J.P. Morgan Chase (JPM) and Wells Fargo (WFC). Famed analyst Dick Bove believes that 2013 bank earnings will be record-setting once again.
In other news, eurozone industrial production data for February were released with mixed results. The month-over-month reading beat expectations, rising 0.4% vs. 0.1% expected, while the previous reading was revised lower to -0.6% from -0.4%. However, on an annualized basis, industrial production slipped 3.1% from a year ago, below expectations of a 2.5% annualized contraction.
Reports circulated that Cyprus had asked for more bailout funds at the Eurogroup meeting. However, this morning, a government spokesperson denied these rumors and said that Cyprus has not asked for more funding.
An International Monetary Fund draft report leaked to markets shows the IMF slightly cutting its 2013 U.S. growth outlook to 1.7% from 2.0% previously because of fiscal cuts.
S&P 500 futures fell 4.00 points to 1,583.50.
The EUR/USD was lower at 1.3050.
Spanish 10-year government bond yields fell to 4.66% from 4.77%.
Italian 10-year government bond yields rose to 4.34% from 4.33%.
Gold fell 0.88% to $1,547.80 per ounce.
Asian shares were mostly lower overnight as the post-Bank of Japan momentum rally finally cooled in Japan. The Japanese Nikkei Index fell 0.47% and the Shanghai Composite Index declined 0.58% while the Hang Seng Index slipped 0.06%. Also, the Korean Kospi fell 1.31% on fears that North Korea has the capability to launch a nuclear missile and Australian shares rose 0.13%.
European shares were lower overnight on Cyprus fears as well as following the weaker than expected industrial production report. The Spanish Ibex Index fell 1.41% and the Italian FTSE MIB Index fell 1.6%. Meanwhile, the German DAX declined 1.5% and the French CAC lost 1.08% while U.K. shares fell 0.67%.
Commodities were lower overnight on global growth fears in a clear risk-off environment. WTI crude futures fell 1.24% and Brent crude futures declined 1.34%. Copper futures slipped 0.45% following the draft IMF report on the U.S. showing slower growth. Gold was lower and silver futures fell 1.22% to $27.36 per ounce.
Currency markets were on the move overnight as the euro weakened and the yen strengthened in a clear risk-off mood. The EUR/USD was lower at 1.3050 and the dollar fell against the yen by 0.6% to 99.08. Overall, the Dollar Index rose 0.22% on strength against the euro, the pound, the Canadian dollar, and the Swiss franc.
Earnings reported Thursday
Key companies that reported earnings Thursday include:
Pier 1 Imports (PIR) reported fourth quarter earnings per share of $0.60, in line with estimates, on slightly stronger than expected revenue of $551.6 million.
Rite Aid (RAD) reported fourth quarter earnings per share of $0.13 vs. an expected loss of $0.02 per share on revenue of $6.46 billion vs. $6.45 billion expected.
Stocks moving in the premarket included:
Cliffs Natural Resources (CLF) shares rose 1.81% premarket as institutions continue to buy the stock.
J.C. Penney (JCP) shares declined 4.37% premarket after rallying from Tuesday's lows the previous two days on fears that new CEO Mike Ullman and activist investor Bill Ackman cannot save the company. New reports surfaced that J.C. Penney has a capital shortfall of close to $1 billion that it needs to fill to stay afloat.
Merck (MRK) shares fell 1.14% after reporting that the company will look to create a pill version of an already successful fungal infection drug that is only available as a liquid.
U.S. Steel (X) shares fell 1.03% premarket on global growth fears as investors worry that steel demand will slow if the economy does not grow as much as previously thought.
Notable companies expected to report earnings Friday include:
J.P. Morgan Chase (JPM) is expected to report first quarter earnings per share of $1.39 vs. $1.19 a year ago.
Wells Fargo (WFC) is expected to report first quarter earnings per share of $0.88 vs. $0.75 a year ago.
On the economics calendar Friday, producer prices and retail sales are due out as well as consumer sentiment and business inventories. At 12:30 p.m. ET, Federal Reserve Chairman Ben Bernanke is expected to speak at the community development conference in Washington.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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