By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.S. stock futures fell sharply on
Thursday, as investors appeared to grow nervous about interest-rate
hikes following strong economic data.
Surging bond yields also took a toll on appetite for
equities.
Investors will get financial updates from oil major Exxon Mobil
and weekly labor-market data ahead of Friday's widely anticipated
July jobs report.
Also in the spotlight is Argentina. Standard & Poor's
Ratings Services declaring the country in selective default after
talks aimed at a settlement between Argentina and holdout creditors
fell apart late Wednesday.
Futures for the Dow Jones Industrial Average (DJU4) were off
their lows, but still held a deficit of 83 points, or 0.5%, to
16,738. Futures for the S&P 500 index (SPU4) lost 11 points, or
0.5%, to 1,954, and those for the Nasdaq 100 index (NDU4) gave up
24 points, or 0.6%, to 3,945.
"The markets seem to be digesting a lot of the data from
[Wednesday] along with the Fed statement. Even though there is a
good chance we'll see a revision to what was a surprisingly good Q2
GDP number, this does raise the specter of monetary tightening in
less than a year," said Brenda Kelly, chief market strategist at
IG, in emailed comments.
U.S. gross domestic product, released Wednesday, expanded by a
stronger-than-expected 4%.Stocks had a choppy session Wednesday,
but eked out slight gains after Federal Reserve Chairwoman Janet
Yellen appeared to soothe fears that the central bank might start
raising interest rates sooner than anticipated.
U.S. Treasury prices sank in the wake of the growth data, and
equities are feeling the pinch from the bond selloff that's left
the yield on the 2-year note (2_YEAR) at its highest level since
May 2011, said Kelly. Prices and yields move inversely.
International concerns
Concerns about the health of Europe's banking sector may drag on
Wall Street, as shares of Banco Espírito Santo SA in Lisbon sank as
much as 50% after the Portuguese lender reported a record
second-quarter loss. The loss came as the bank's troubled parent
company, Espirito Santo International, found ways to use the bank
to raise funds that are largely unrecoverable.
At 8:30 a.m. Eastern Time, the Labor Department releases its
weekly jobless claims report, with the number of Americans who
filed new applications for unemployment benefits last week expected
to rise to about 308,000 by economists surveyed by MarketWatch. Due
the same time, the Labor Department's employment cost index, which
measures how much companies pay in wages and benefits, is projected
to climb a modest 0.5% in the second quarter.
Even with the expected rise in jobless claims, the labor market
is still strengthening, as the economy has added more than 200,000
jobs a month for five consecutive months. On Friday, the July
nonfarm-payrolls report is projected to show a gain of 230,000
jobs.
A reading on July business conditions in the Chicago area is due
at 9:45 a.m. Eastern Time, and economists are looking for the
Chicago PMI to rise to 63.5, from 62.6 in June.
Corporate news
Among individual stocks, Time Warner Cable Inc.'s (TWC)
second-quarter results surpassed Wall Street's estimates.
DirecTV (DTV) said quarterly earnings rose to $1.59 a share,
from $1.18 a share a year ago, boosted by its coverage of the FIFA
World Cup in Brazil. The FactSet consensus was for per-share
earnings of $1.54.
ConocoPhillips (COP) said quarterly earnings rose more than 1%
on higher oil and gas production and average selling prices.
Exxon Mobil (XOM) is expected to report adjusted second-quarter
earnings of $1.86 a share.
Avon (AVP) said second-quarter profit fell on lackluster sales,
particularly in Latin America and North America.
Pharmaceutical distributor McKesson's (MCK) sales and adjusted
earnings came in above expectations. The company also raised its
full-year fiscal 2015 adjusted earnings outlook to $10.50 to $10.90
a share. Wall Street is looking for $10.65 a share.
After the bell, Tesla Motors (TSLA) will release quarterly
results.
Shares in Synchrony Financial begins trading Thursday after the
giant initial public offering was priced at $23, the low end of
expectations.
U.S.-listed shares of Nokia Oyj (NOK) may be active after Nokia
Networks agreed to buy a part of Panasonic's wireless networks
business for an undisclosed amount.
In the commodities market, crude-oil futures (CLU4) fell below
$100 a barrel on bearish U.S. inventory data, while gold futures
(GCQ4) turned lower.
European stocks fell, and Asian equities closed mixed, with
Japan's Nikkei Average ending down by 0.2%.
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