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Pre-Market Primer: Futures Fall Ahead of Beige Book, BofA Beats the Street


Index futures are falling this morning despite mostly positive earnings news. Perhaps Bernanke's testimony today will give US stocks a boost.

MINYANVILLE ORIGINAL Stock futures pointed toward a lower opening today despite mostly positive earnings news from key companies as investors eye the Fed's Beige Book release.

Fed Chief Ben Bernanke will give the second part of his semi-annual report on monetary policy to the House Financial Services Committee this morning. Yesterday, Bernanke told Senators that the Fed is prepared to take more drastic action to stimulate growth if economic conditions worsen.

Housing starts in June surpassed economists' expectations in June. Statistics released today show that builders broke ground at new homes at an annual rate of 760,000 buildings.

Asian stocks declined while European indices showed gains. Before the New York's market open Dow (^DJI) futures fell 0.27% to 12,702, S&P 500 (SPY) futures dropped 0.31% to 1,354.30, and Nasdaq (^IXIC) futures declined by 0.25% to 2,580.50

The unemployment rate in the UK slipped to 8.1% in the last quarter. The number of people employed rose by 181,000 to 29.354 million, the highest level since November, 2008. The Bank of England voted to increase monetary stimulus and could possibly consider cutting interest rates, according to the central bank's meeting minutes. Germany managed to sell 2-year debt at a negative yield for the first time at a debt auction today. Investors happily paid Germany an average of 0.06% for the pleasure of lending the country 4.173 billion euros for two years.

In a sign that China is easing out of a potentially dangerous property bubble burst, statistics showed that property values were unchanged in June after eight months of declines. This could be taken as a sign that China's pro-growth policies, such as two recent interest rate and bank reserve rate cuts, are making a positive impact on the economy.

Oil futures declined by 0.25% to $89.00 this morning ahead of the government's report on US crude oil stockpiles.

In earnings news, Bank of America (BAC) posted a profit of $0.19 per share for the last quarter, beating analyst estimates. BofA's provisions for loan losses continues to fall and CEO Brian Moynihan's cost-cutting 'Project New BAC' succeeded in reducing noninterest expenses by 2.1 billion on a quarterly basis. This involved trimming the workforce by 3,228. Shares advanced 1% in pre-market trading.

Intel (INTC) earnings were unchanged at $0.54 per share in the second quarter, beating estimates. Weak PC demand and a sluggish global economy took a toll on the chipmaker's top line, and the company revised its outlook for this fiscal year's PC sales growth outlook to 3-5%. The release of a new Windows operating system from Microsoft (MSFT) might revive sales later in the year. Intel shares fell only 1% in after-hours trading, which supports analysts' claims that the pessimistic sales outlook for PCs is largely priced in for Intel.

Also in yesterday's earnings news, Yahoo (YHOO) profits rose last quarter to $0.27 from $0.18 per share despite a 7% drop in display ad revenue and a 17% decline in search. Yahoo relies on Microsoft's Bing search engine, and admits that there are some problems with the partnership, which only guarantees revenue for the next nine months. The new CEO, Marissa Mayer, was absent from the earnings call.

Twitter: @vincent_trivett
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