US Stock Futures Signal Flat Open Amid Corporate Earnings Concerns

   on January 07 2013 4:47 AM
Traders work on the floor of the New York Stock Exchange
Traders work on the floor of the New York Stock Exchange December 3, 2010. REUTERS

The U.S. stock index futures pointed to a flat open Monday as investors worried that the sluggish economic growth would affect the corporate earnings.

The futures on the Dow Jones Industrial Average were down 0.03 percent, the futures on the Standard & Poor's 500 Index were down 0.06 percent and those on the Nasdaq 100 Index were up 0.05 percent. 

The earnings season, which starts with Alcoa Inc reporting the fourth quarter results Tuesday, is expected to be sluggish and could witness the markets struggling to maintain the gains made. The prevalent view in the markets is that a high growth in earnings is not to be expected and that a forward push, if any, will be the result of sales and economic activities of the companies. The earning figures do have an important impact on the price movements in the market, with the stock moving in direct correlation to the earnings.

S&P 500 revenue dropped 0.8 percent in the third quarter of 2012, according to the figures from Thomson Reuters. However, it is highly unlikely that such decline would be repeated in the fourth quarter. The expectation is that S&P 500 revenue has risen 1.9 percent in the fourth quarter.

Negative global factors could also affect the markets during a shaky earnings season. The projected decrease in China's growth rate and the continuing debt crisis in the euro zone could result in a market slowdown.

On Friday, the U.S. stocks rose as investor confidence continued to be lifted amid the optimism on the bill passed by the Congress to avert the fiscal cliff. Meanwhile, according to the data released Friday by the Bureau of Labor Statistics, the nonfarm payrolls report, which measures the change in the number of people employed in the previous month, excluding the farming industry, increased to 155,000 in December from 146,000 in November.

According to the data released Friday by the Bureau of Labor Statistics, unemployment report, which measures the percentage of the total workforce that was unemployed and actively seeking employment in the previous month, remained unchanged at 7.8 percent in December from that in the previous month.

The Dow Jones Industrial Average rose 0.33 percent, the S&P 500 Index was up 0.49 percent and the Nasdaq Composite Index gained 0.04 percent.

Asian stocks fell Monday as investors remained cautious waiting for policymakers to announce more measures in the year to boost the economic growth. Meanwhile, according to the data released Monday by the Bank of Japan, the country’s monetary base advanced 11.8 percent in December from a 5 percent rise in November.

Hong Kong’s Hang Seng Composite declined 1.34 points, Japan’s Nikkei fell 89.10 points and India’s Sensex dropped 17.09 points.

European stocks fell Monday following the global cues. London's FTSE 100 was down 10 points, Germany's DAX 30 fell 20.22 points and France's CAC 40 dropped 5.57 points. 

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