Stock futures edge higher as traders prepare for unemployment report, start of earnings season

By Stephen Bernard, AP
Thursday, October 7, 2010

Traders avoid big moves before earnings, jobs data

NEW YORK — Stock futures were little changed Thursday as traders avoided any big moves before a key reading on unemployment claims and PepsiCo kicked off earnings with mixed results.

PepsiCo said its third-quarter profit jumped in part on revenue gains following its acquisition of its two largest bottlers earlier this year. But its earnings still fell short of forecasts, and the company narrowed its earnings outlook to a level below analysts’ forecasts.

Alcoa Inc. will be the first component of the Dow Jones industrial average to report earnings when it releases results after the market closes.

PepsiCo and Alcoa provide a glimpse into how companies were able to deal with slowing economic growth over the summer and provide insight into where corporate executives believe the economy is headed. Analysts have said earnings outlooks and revenue growth will be vital to propelling stocks higher in the next few weeks as hundreds of companies report results.

Traders will also get a reading on the jobs market for the second straight day. The Labor Department is expected to report first-time claims for unemployment benefits crept higher last week. Economists polled by Thomson Reuters forecast claims rose by 2,000 to 455,000 last week.

Claims remain at a level that indicates employers neither adding nor cutting a large amount of jobs each month. High unemployment remains a major obstacle to strong growth and could be a drag on earnings in the coming quarters as consumers cut back on spending because of job concerns.

The report comes a day after payroll company ADP said private employers cut jobs last month. The Labor Department releases its monthly report on employment Friday, which is regularly among the most important economic reports the government releases.

Ahead of the opening bell, Dow Jones industrial average futures rose 13, or 0.1 percent, to 10,9198. Standard & Poor’s 500 index futures rose 1.70, or 0.2 percent, to 1,157.40, while Nasdaq 100 index futures fell 0.75, or less than 0.1 percent, to 2,003.50.

PepsiCo shares fell $1.06 to $67.05 in pre-opening trading. Alcoa rose 7 cents to $12.44.

Bond prices remained nearly their lowest levels since January 2009 as traders expect the Federal Reserve to resume a program to buy Treasurys as part of a plan to stimulate the economy. The yield on the 10-year Treasury note, which moves opposite its price, rose to 2.40 percent from 2.39 percent late Wednesday. Its yield is often used to help set interest rates on loans.

The dollar continued to fall against other major currencies because it would lose value if the Fed starts buying bonds again and interest rates fall further. Gold, which is considered a safe alternative to the dollar, hit a new record of $1,366.00 an ounce early Thursday before pulling back to $1,361.10 an ounce.

Overseas, Britain’s FTSE 100 rose 0.1 percent, Germany’s DAX index gained 0.2 percent, and France’s CAC-40 rose 0.3 percent. Japan’s Nikkei stock average fell 0.1 percent.

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