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U.S. Stock Futures Hold Gains

by on July 31, 2012 12:49 pm GMT
 

NEW YORK—A raft of better-than-expected economic reports failed to drive stocks higher ahead of a key meeting of central bank policy makers.

The Dow Jones Industrial Average fell 14 points, or 0.1%, to 13058 in Tuesday morning trading. The Standard & Poor’s 500-stock index fell one point, or 0.1%, to 1385, and the Nasdaq Composite Index added two points, or 0.1%, to 2948.

In focus for investors will be the start of the Federal Reserve’s two-day policy-setting committee meeting. Recent overtures from European central bankers that additional stimulus measures could be on the way have helped fuel stocks, and heightened anticipation for the Fed to signal moves of its own.

“Economic reports are indicating weakness in the U.S. and a recession in Europe, and heading into this week, there’ve been greater expectations that the Fed would add some form of stimulus,” said Robert Pavlik, chief market strategist at Banyan Partners.

“No change in statements or policy will probably cause markets to give back gains from last week,” he said, referring to a rally that ended Friday with the Dow’s biggest three-day point gain of the year.

Consumer discretionary stocks were the worst performers in morning action. High-end leather goods maker Coach slid, leading declines on the S&P 500, after quarterly revenue fell shy of analysts’ estimates and the company provided a downbeat outlook for the year.

Dow component Pfizer

gained after the pharmaceutical company reported second-quarter earnings and revenue that exceeded expectations, as lower expenses countered declining sales of its cholesterol-lowering drug Lipitor.

Stocks were little moved by positive readings on U.S. economic growth. Home prices rose in May for the second straight month, according to Standard & Poor’s Case-Shiller home-price indexes. The Chicago purchasing manager’s index, a barometer of manufacturing health, beat expectations and rose in July, while a separate reading showed U.S. consumer confidence rose more than expected in July. Personal income in June increased and slightly topped forecasts.

“In this market, the problem with good economic data is that, if you’re looking for a QE trade, maybe then it doesn’t happen as soon as you’d like,” said Rick Fier, director of equity trading Conifer Securities, referring to quantitative easing, the Fed’s asset-purchase program.

“We’re going to see tons of economic numbers this week, ending in Friday’s [monthly jobs report], and still, people aren’t betting on a big rally,” he said.

European markets fell, with the Stoxx Europe 600 down 0.8%, as weak data and disappointing earnings reports weighed on sentiment, offsetting expectations of new stimulus measures from the Fed and European Central Bank.

Swiss banking giant UBS

fell after recording a large loss from Facebook’s

initial public offering, and announced plans for legal action against Nasdaq OMX Group

NDAQ.

U.K. oil heavyweight BP

declined after profits sank 96% on a huge write-down of asset values.

Asian markets were mostly higher, with Japan’s Nikkei Stock Average gaining 0.7% and Australia’s S&P/ASX 200 tacking on 0.6%. But China’s Shanghai Composite fell again, losing another 0.3% to another three-year closing low.

In other earnings-related news, Archer Daniels Midland

declined after the company, one of the world’s largest grain traders and processors, missed second-quarter earnings estimates.

Humana

slid after the health-care company reported second-quarter earnings that topped expectations but revenue that missed, and lowered its full-year earnings outlook, citing higher-than-anticipated Medicare benefit ratios and increased utilization among members.

Dendreon

slumped after the biotechnology company reported a wider-than-expected second-quarter loss and said it was reducing its workforce by more than 600 employees over the next year as part of a restructuring aimed at cutting costs by $150 million a year.

Seagate Technology

stumbled after the hard-drive maker’s fiscal fourth-quarter results missed forecasts, citing the suspension of some shipments after it identified a quality problem with one of its suppliers.

CafePress

slumped after posting second-quarter loss that widened on higher marketing costs and the e-commerce company offered a downbeat outlook for the second half of the year.

Cirrus Logic

shot up after the semiconductor maker topped fiscal first-quarter earnings estimates and provided a second-quarter revenue outlook that was well above current projections.

Kulicke & Soffa

ran up after the semiconductor- and LED-equipment maker reported better-than-expected fiscal third-quarter earnings and revenue and provided an upbeat fourth-quarter revenue outlook.

Crude-oil futures fell 1.3% to $88.60 a barrel, while gold futures were flat at $1,624 a troy ounce. The U.S. dollar slipped against the euro and rose against the yen. The yield on benchmark 10-year U.S. Treasury bonds fell to 1.480% as demand rose.

Write to Chris Dieterich at chris.dieterich@dowjones.com