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Pre-Market: Herbalife Rises on Buyback; Pizza Hut Could Be Yum Brand's Lifesaver in China


China is cooling on KFC.

Investors cautiously nudged stocks up this morning ahead of the release of US manufacturing data and motor vehicle sales figures.

Before the opening bell, futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) were up 0.11% at 15,647. Futures on the S&P 500 (INDEXSP:.INX), which just suffered its worst January since 2010, rose 0.07% to 1,777.90 and Nasdaq (INDEXNASDAQ:.IXIC) futures climbed 0.09% to 3,517.00.

Shares of Jos. A Bank Clothiers Inc (NASDAQ:JOSB) dropped 5.5% on reports that the company will buy Eddie Bauer Inc from Golden Gate Capital, a private equity firm. The company is currently still involved in a struggle with The Men's Wearhouse Inc (NYSE:MW) in which both rivals try to buy one another. Jos. A. Bank also rejected the latest hostile bid from The Men's Wearhouse on grounds that it undervalues its business.

Shares of Sprint (NYSE:S) fell 2.2% as CEO Dan Hesse and Masayoshi Son, the CEO of Sprint's parent company, was called to meet with FCC Chairman Tom Wheeler. One possible reason for this meeting is Sprint's apparent plans to bid for rival T-Mobile US (NASDAQ:TMUS). The FCC might reject further consolidation of the mobile telecom space after T-Mobile snapped up MetroPCS and Sprint sold to Japan's Softbank (OTCMKTS:SFTBF).

Herbalife (NYSE:HLF), the multi-level marketer that investor Bill Ackman calls a pyramid scheme, said that it will buy back $1 billion in shares, sending its price up 2.2%. Since Ackman shorted the stock in 2012, Herbalife has rallied roughly 50%.

Automakers such as General Motors (NYSE:GM) and Toyota (NYSE:TM) will be in focus today as they report January US sales numbers. Overall, the pace of domestic vehicle sales are projected to rise to 12.2 million from 11.9 million in December 2013. Total vehicle sales likely rose to a rate of 15.8 million from 15.4 million.

Yum Brands (NYSE:YUM), which operates Taco Bell, KFC, and other fast food chains, will report earnings after trading hours conclude this afternoon. The company is expected to report that earnings per share fell to $0.80 from $0.83 a year ago. Yum's Chinese KFC franchises, where it gets a significant amount of revenue, have been hit by higher chicken prices and quality concerns, but Pizza Hut, which saw sales rise 7% in China in November 2013, could offset KFC's weakness.

Later this morning the Institute for Supply Management will release January's US manufacturing index, which is expected to cool to 56 from 57 in December 2013. (Readings over 50 indicate growth for the sector.) Markit's similar PMI will also be released. Economists expect that measure to fall to 53.9 from 55.

Finally, construction spending was likely to have been flat in December 2013 after rising 1% in November, according to the Census Bureau.

Twitter: @vincent_trivett
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