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Pre-Market Primer: Euro Economic Gloom Continues; Investors Don't Expect Impressive Earnings


Earnings season starts today.

Stock futures were down slightly this morning, pointing toward a lower opening as Alcoa (NYSE:AA) "officially" kicks off earnings season and a spate of disappointing eurozone data wore on investor confidence.

Futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) fell 0.12% to 13,291 and S&P 500 (INDEXSP:.INX) futures slipped 0.12% to 1,454.00. Nasdaq (INDEXNASDAQ:.IXIC) futures are down 0.10% to 2,715.00. Asian markets fell today, and European indices are heading higher despite disappointing economic indicators.

Earnings season officially begins today with Monsanto (NYSE:MON) reporting before the opening bell and Alcoa after the close.

Monsanto reported earnings per share of $0.62, beating expectations by $0.25. Revenue of $2.94 billion was supported by the expanding Latin American corn business, and seed sales in the US. Alcoa is expected to book its best annual earnings growth since 2008.

Shares of Yum Brands (NYSE:YUM), which owns the KFC and Taco Bell brands, fell 4.5% in the pre-market after it revealed that same-store sales in China, its biggest market, fell 6% in the fourth quarter. Yum said that KFC sales in China declined because of government reports on contamination in China's poultry supply.

Samsung Electronics (KRX:005930) said that it expects to book fourth quarter operating profit of $8.3 billion, up 89% from the year earlier. Despite stiff competition from its corporate frenemy Apple's (NASDAQ:AAPL) iPhone 5, earnings from smartphones like the Galaxy S III and Note "phablet" probably doubled from the year earlier. The Korean company might see its $1.05 billion fine in a patent case from Apple, which is also its biggest customer, reduced, but it is expecting to make provisions for the loss.

Retail sales across the eurozone rose 0.1% in November 2012, but still came in 2.6% below 2011's level. Unemployment in the region rose to a record high of 11.8%. 18.82 million Europeans are out of work. Austria has the region's lowest unemployment rate (4.5%), and Spain has the highest with 26.6% jobless. Youth unemployment rose to 23.7% from 23.4%.

On a brighter note, the euro area's business sentiment rose to 87 from 85.7, the second straight monthly rise.

Trade and manufacturing figures from Germany do no bode well for the eurozone's top economy. Exports from Germany fell 3.4% on a monthly basis in November 2012. Economists expected a modest 0.5% fall. Imports fell 3.7% where they were thought to rise 0.5%. Factory orders fell 1.8% after rising 3.8% in October.

Twitter: @vincent_trivett
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