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Pre-Market: Wells Fargo Reports Lower EPS; Asian Stocks Break Nine-Week Winning Streak


Municipal fund bonds see highest withdrawals over the past week since January.

Stock futures pointed toward a higher open on Friday. Before the opening bell, Dow Jones (INDEXDJX:.DJI) futures rose 0.15% to 16,868. Nasdaq (INDEXNASDAQ:.IXIC) futures moved higher, rising 0.30% to 3,885.50.  Futures on the S&P 500 (INDEXSP:.INX) were up 0.16% to 1,961.


Wells Fargo (NYSE:WFC) was in line with analysts' estimates for its second-quarter earnings, reporting $5.7 billion in net income, with a diluted EPS of $1.01 -- 3% higher year-on-year. Revenue came in slightly under forecasts at $21.1 billion versus 2.14 billion. The San Francisco-based bank saw loans grow by $32.7 billion, or 4%, and its deposits rise by $91.7 billion, or 7%. However, Wells Fargo broke its 17-quarter winning streak of rising per-share profits; in order to continue it, Wells Fargo would have needed to report at least 1.06 EPS. Shares of Wells Fargo have gained 15% year-on-year, and it has ranked as the highest earner out of each of the US banks in 2013, beating JPMorgan (NYSE:JPM) for the top spot by $4 billion. Wells Fargo fell 0.35% in pre-market trading.

Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO), the second and third largest tobacco companies in the United States, are nearing a $56 billion merger. The two companies have been in talks with London-based British American Tobacco (NYSEMKTS:BTI), which will buy assets from the newly formed group. The deal does not come as a surprise -- the three companies have been in talks since the beginning of the year. However, people familiar with the deal told the Financial Times that nothing is set in stone, and the deal could fail to close. Reynolds rose 1.51% in pre-market trading. Lorillard jumped 5.74%. British American Tobacco was up 0.03%.

Unilever (NYSE:UN) has dropped some dead weight: It has sold its Slim-Fast brand to the private equity firm Kainos Capital while retaining a minority stake in the weight-loss business. Unilever bought Slim-Fast for $2.3 billion in April 2000, the same day it acquired ice cream-maker Ben and Jerry's for $326 million. The financial terms of the deal were not disclosed. While Unilever is still holding onto Ben and Jerry's, Slim-Fast didn't make the cut when it came to the company's recent restructuring plan, which saw Unilever off-load its pasta sauce brands Ragu and Bertolli in May. Unilever said the Slim-Fast sale is the last step in reshaping its North American portfolio. Shares of Unilever fell 2.8% ahead of the opening bell.

Blackstone (NYSE:BX) will buy wealth management firms Lombard International Assurance and Insurance Development Holdings from Friends Life Group (LON:FLG) for $542 million, subject to antitrust and regulatory approvals in England. The deal could be worth as much as $679 million when factoring in contingent elements of the deal. Blackstone intends on returning $448 million to shareholders through a share buyback program. Shares of Blackstone fell 0.15% ahead of the opening bell.


New data released by mutual fund ratings company Lipper found investors withdrew $790.3 million from US municipal bond funds in the week ending July 9. The outflows were the largest recorded since January, with high-yield funds accounting for more than $691 million of total outflows.

The Treasury budget, released at 2:00 p.m., is the only economic data due today. Philadelphia Fed President Charles Plosser will be moderating a panel discussing entrepreneurial issues at the Rocky Mountain Summit in Jackson Hole, Wyoming, at 11:15 a.m. Chicago Fed President Charles Evans and Atlanta Fed President Dennis Lockhart will be speaking on a panel at the same conference at 2:00 p.m.

Global Markets

Asian stocks finished lower overnight, posting their first weekly loss in nine weeks. Chinese stocks, however, bucked the regional trend, rising amid speculations that local governments will loosen property development restrictions to stay the economic slowdown. Meanwhile, China's central bank is investigating the Bank of China after allegations were made by a state broadcaster that the country's fourth largest lender has been laundering money offshore for clients. In Europe, stocks rebounded from a five-day losing streak, rising alongside increased takeover activity. As the price of Brent crude oil fell as low as $107.98 in early trading, the price of gold continued its weekly rebound, trading near its highest levels in close to fourth months.

Twitter: @brokawbrokaw
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