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Pre-Market Primer: Stocks Continue to Fall on Fed Minutes; Jobless Claims Rise More Than Expected


PMI data is showing more misery in Europe.

After the Fed's policy meeting minutes cast doubt on the future of quantitative easing yesterday, stocks continue to slip this morning on more news of the eurozone's deterioration and bad employment indicators in the US.

Dow (INDEXDJX:.DJI) futures are off 0.15% at 13,868. Futures on the S&P 500 (INDEXSP:.INX) fell 0.19% to 1,504.50 and Nasdaq (INDEXNASDAQ:.IXIC) futures sank 0.34% to 2,728.25.

Yesterday's Federal Open Markets Commission minutes revealed that a few members "emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved."

The markets retreated from multi-year highs yesterday as investors interpreted the statement to mean that the Fed might end or alter its open-ended $85 billion-per-month asset purchase program.

Initial claims for unemployment insurance rose to 362,000 last week, worse than estimates of 355,000. Claims totaled 341,000 in the week before last. A separate report showed that consumer prices stayed flat in January, though inflation rose 1.6% from a year ago, significantly below the Federal Reserve's target rate.

Later this morning, the National Association of Realtors is likely to report that existing home sales decreased to a seasonally adjusted annualized rate of 4.9 million from 4.94 million in December 2012.

European stocks declined as service and manufacturing sector data disappointed. The services purchasing managers index in France fell to 42.7 this month, showing a wider contraction than January's 43.6. (PMI readings below 50 signal a decline in activity in the sector.) Composite PMI dropped 0.4 points to 42.3 and manufacturing's contraction slowed to 43.6 from 42.9. Today, the French media also reported that the EU Commission might cut its forecast for the country's GDP growth for 2013 to 0.1% from 0.4%.

The flash manufacturing PMI for the eurozone as a whole fell to 47.8, 0.1 point lower than in January. The region's composite PMI fell to 47.3 from 48.6.

Germany's data pointed to a growing rift between the eurozone's two biggest countries. German composite PMI showed expansion at 52.7, a slower growth than last month's 54.4. Composite PMI hit a one year high of 50.1

"Despite the slight loss of momentum since January, the survey suggests that Germany can still be relied upon as an engine for the eurozone," wrote Tim Moore of Markit, in the PMI report.

Factory orders in the UK came in better than expected, rising to -14 in February from -20 in January.

On the corporate front, Wal-Mart (NYSE:WMT) reported earnings of $1.67 per share in profit, beating expectations by a dime. Revenue disappointed however, climbing 3.9% to $127.1 billion. In the earnings release, Wal-Mart executives revealed that the poor February sales that were leaked to the press are likely due to delayed tax returns. The company issued guidance for this quarter that trailed estimates. In the current quarter, the first since the payroll tax holiday ended, it expects $1.11 to $1.16 per share in profit.

Tesla Motors (NASDAQ:TSLA) shares sank 6.59% in the pre-market after delivering a wider loss in the fourth quarter. The company lost $0.65 per share despite sales increasing sevenfold to $306.3 million. Despite mixed reviews of its flagship vehicle, Tesla expects to swing to a profit in the first quarter.

Hewlett-Packard (NYSE:HPQ) shares could be active today, as the company is slated to report earnings after the bell. Analysts expect to see earnings fall to $0.71 per share from $0.92 on revenue of $27.79 billion

Twitter: @vincent_trivett
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