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Pre-Market: Signet Buys Zales; Housing Starts Falter


Herbalife is going gangbusters in China.

Stock futures were slightly lower on Wednesday as Wall Street awaited the minutes of the Federal Reserve's latest policy meeting. A report issued today said that housing starts were worse than expected in January.

Before the opening bell, Dow (INDEXDJX:.DJI) futures were down 0.31% to 16,057. S&P 500 (INDEXSP:.INX) futures declined by 0.34% to 1,831.10. Futures on the Nasdaq Composite (INDEXNASDAQ:.IXIC) fell 0.19% to 3,668.00.

Signet Jewelers Ltd. (NYSE:SIG) agreed to buy Zale Corporation (NYSE:ZLC) for about $690 million, about a 40% premium to Zale's last closing price. The deal greatly expands the reach of the Bermuda-based Signet in the United States. After the deal was announced, Signet shares rose 14.2% and Zale rose 40%.

Herbalife (NYSE:HLF) shares rose in after-hours trading after the company reported earnings yesterday afternoon. Profit rose 10% to $123.5 million, or $1.28 per share. Revenue rose 20% to $1.27 billion, boosted by a 120% rise in China sales. Analysts had expected EPS of $1.25 from $1.25 billion in sales. Despite calls for investigations against multilevel marketers such as itself, Herbalife's outlook was positive and exceeded analyst estimates. The company raised the range of its expected full-year 2014 earnings from $5.85 to $6.05 per share. The stock jumped after hours, but its gains have been reduced to 0.1%.

Tesla Motors (NASDAQ:TSLA) could also see heavy trading ahead of its earnings statement that will come out after the bell. Analysts predict that the electric-car company will post earnings of $0.22 per share. Shares of Tesla were down slightly this morning after hitting an all-time high yesterday on a rumor that Apple (NASDAQ:AAPL) is exploring the possibility of buying the automaker.

On the economic front, the rate of housing starts slowed in January's cold weather. Builders broke ground on homes at an annualized rate of 880 million, down from 1.05 billion in December 2013. Economists had expected a rate of 950 million.

This afternoon, the Federal Open Market Committee will release the minutes of its latest policy meeting, where it voted to scale back monthly asset purchases by $10 billion for the second straight month. The minutes will give investors more insight on the central bank's thoughts on the recent slowdown in the job market and the future of its quantitative easing program. Fed members Dennis Lockhart and James Bullard will also speak publicly about monetary policy and the economy.

China reduced its US debt holdings by the most since 2011 in December 2013. America's largest creditor reduced its holdings of US bonds by 3.6% to $1.27 trillion. One possible reason is fears of over-dependency or eventually rising interest rates as the Fed gradually reduces its own buying of Treasuries.

Twitter: @vincent_trivett
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