U.S. Stock Futures Fall as Banks Beat Estimates

First Published Wednesday, 16th January 2013 01:24 pm - © 2013 Dow Jones


By Kaitlyn Kiernan

NEW YORK--U.S. stock futures slipped even as earnings season picked up with a pair of better-than-expected reports from banks J.P. Morgan Chase & Co. and Goldman Sachs Group Inc.

About 90 minutes ahead of the open, Dow Jones Industrial Average futures declined 72 points, or 0.5%, to 13391.

Standard & Poor's 500-stock index futures were off five points, or 0.3%, to 1461, and Nasdaq 100 futures gave up less than a point at 2714.

Changes in stock futures don't always accurately predict stock moves after the opening bell.

J.P. Morgan shares slipped 0.8% even as the largest U.S. bank by assets said fourth-quarter earnings surged 53% on strong revenue and as credit continued to strengthen. Separately Wednesday, the bank made public an internal report outlining mistakes and oversights by executives who played a role in its multibillion-dollar trading loss linked to outsized, complex trades on credit default swaps tied to corporate bonds.

In the report, J.P. Morgan said it cut Chief Executive James Dimon's compensation for 2012 by 50.2% to $11.5 million.

Goldman Sachs said fourth-quarter profit exceeded expectations as investment-banking revenue surged 64% and net revenue jumped 53%

In economic news Wednesday, the U.S. consumer price index for December is expected to remain unchanged when the latest report is released at 8:30 a.m. ET. Meanwhile, economists expect consumer prices minus food and energy will rise 0.2%.

Just before the open at 9:15 a.m., industrial production data for December are expected to show a 0.3% rise, while economists forecast a reading of 78.5% on capacity utilization.

An index of sentiment among homebuilders, due at 10 a.m., is forecast to inch higher in January, to 48 from 47 in December. That would put the measure at its highest reading since April 2006.

European stocks slid after a warning by the World Bank Tuesday that U.S. budget battles are restraining economic growth globally and pose a greater risk to the global economy than even a renewed euro-zone crisis. The Stoxx Europe 600 fell 0.3%.

Asian stocks were broadly lower, with Japanese stocks falling sharply as the yen rebounded after Japan's economy minister, Akira Amari, said a substantially weaker yen wasn't good for the economy. The Nikkei Stock Average finished 2.6% lower. China's Shanghai Composite dropped 0.7%.

Front-month February crude-oil futures dipped 0.1% to $93.21 a barrel, while February gold futures dropped 0.5% to $1,675.10 an ounce. The dollar edged higher against the euro after Eurogroup President Jean-Claude Juncker said the currency was "dangerously" high. The dollar fell against the yen.

At 2 p.m., the Federal Reserve's beige book, readied ahead of a Jan. 29-30 meeting, will give clues to the state of the economy, the first indication after politicians reached a partial budget agreement early this month.

Among other early stock movers, Boeing dropped 4.7% after Japan's All Nippon Airways grounded its fleet of 787-model Dreamliners after one made an emergency landing in Japan.

Chipotle Mexican Grill shares tumbled 11% after the restaurant chain said higher food costs will damp its fourth-quarter earnings despite stronger-than-expected revenue. Chipotle estimated per-share earnings at $1.92 to $1.97 on revenue of $699.2 million, while analysts surveyed by Thomson Reuters were expecting $2.07 a share on $692 million in revenue.

Wendy's shares were flat early after the fast-food chain said fourth-quarter earnings soared as company growth initiatives helped to improve revenue. The company also forecast 2013 adjusted per-share earnings will be higher than analysts previously forecast.

Write to Kaitlyn Kiernan at kaitlyn.kiernan@dowjones.com.

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