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Pre-Market: J.C. Penney Jumps on Recovery; Housing Starts Beat Expectations

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Chinese lenders report steepest rise in bad loans since 2005.

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Stock futures pointed toward a lower open on Friday. Before the opening bell, Dow Jones (INDEXDJX:.DJI) futures fell 0.12% to 16,401. Futures on the S&P 500 (INDEXSP:.INX) were down 0.17% to 1,864.20. Nasdaq (INDEXNASDAQ:.IXIC) futures moved lower, falling 0.20% to 3,566.25.

Stocks

J.C. Penney (NYSE:JCP) delivered strong first-quarter results after yesterday's close, with shares of the Plano, Texas-based retailer trading as high as 19.12% before today's open. Sales have been steadily improving for the company, climbing 6.2% in the past three months, while in-store foot traffic saw gains for the first time in over two years. The retailer has suffered since the 2011 attempt by then incoming CEO Ron Johnson -- formerly an executive at Apple (NASDAQ:AAPL) -- to modernize its offering, which led to nine consecutive quarterly declines in same-store sales growth. The past quarter is the second in which J.C. Penney has seen sales growth, although it's still $1.1 billion away from its sales numbers in the first quarter of 2011.

Verizon (NYSE:VZ) has received votes of confidence from three heavyweight investors, as Warren Buffett's Berkshire Hathaway (NYSE:BRK.B), Daniel Loeb's Third Point LLC, and John Paulson's Paulson & Co separately bought shares of the telecom giant and now own stakes worth $524 million, $415.9 million, and $166 million, respectively. This much is according to first-quarter securities filings, which also showed General Motors (NYSE:GM) was far less fortunate than Verizon. Berkshire sold off 10 million shares of GM -- reducing its stake to 30 million shares valued at roughly $1 billion -- while David Einhorn's Greenlight Capital dumped all of its 17 million shares of the beleaguered automaker. Ahead of the bell, shares of Verizon rose 1.73%, while GM fell 1.11%.

Among other pre-market equity news, Alcoa (NYSE:AA) reached a tentative five-year labor contract with unions representing workers at 10 US metal plants just before their previous contacts expired. Credit Suisse (NYSE:CS) reportedly plans to plead guilty to charges that it helped Americans evade taxes and will pay over $2.5 billion in fines. Shares of cloud computing service provider Rackspace Hosting (NYSE:RAX) jumped 17.18% in pre-market trading after the company hired Morgan Stanley to determine ways it can expand its business. Shares of Credit Suisse fell 1.06%.

Economy

Housing starts jumped in April to an annually adjusted rate of 1.07 million, led by new construction on apartments. The rise beat expectations. But despite the starts rate being up 24.6% since last April, home building remains at about half its pre-crash level. At 9:55 a.m. EDT, the Reuters/University of Michigan consumer sentiment index will be released. The report is anticipated to show a boost in confidence among US consumers, and investors will be paying close attention to this month's reading. At 11:50 a.m., St. Louis Federal Reserve President James Bullard will speak on the economy and monetary policy in Little Rock, Arkansas.

Global Markets

Chinese lenders reported the steepest increase in bad loans since 2005, amid a continuing slowdown in the country. The past quarter marked the 10th straight quarterly increase in rising loan defaults, which made up 1.04% of total lending. The news unnerved Asian investors, and stocks in the region fell for the first time in four days. Meanwhile, in India shares hit record highs, and the rupee surged to an 11-month top as the opposition Bharatiya Janata Party won nationwide elections and took control of the government. In Europe, stocks dipped ahead of the US consumer confidence and housing starts reports. European auto sales growth weakened, rising at its slowest rate in five months.

Twitter: @brokawbrokaw
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