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Pre-Market Primer: McDonald's Misses; Netflix Earnings, Housing Data on Deck


Microsoft might cave to an activist investor that wants it to stop courting consumers.

Stocks are set to extend Friday's all-time high as investors look forward to corporate earnings and data on the housing market.

McDonald's (NYSE:MCD) said this morning that profit rose to $1.38 per share, from $1.32 per share a year earlier, as sales increased 2% to $7.08 billion. This missed analyst expectations by two pennies. Same store sales rose 1% as Europe and the Asia, Middle East, and Africa units posted declines. CEO Don Thompson said that the company is likely to "remain challenged" for the rest of 2013. Shares of McDonald's are down 2.5% this morning.

Netflix (NASDAQ:NFLX) will report earnings after the bell today. Analysts expect earnings to rise to $0.40 per share from $0.11 a year ago. Revenue is likely to have risen more than 20% to $1.07 billion, driven by robust subscriber growth.

Microsoft (NASDAQ:MSFT) shares regained $0.89 of the $4.04 that they lost on Friday after missing on earnings and writing down nearly $1 billion on its stock of the Surface tablet. After losing over $30 billion in market capitalization in a day, the software company faces intensified pressure from activist shareholders. Over the weekend, it was reported by several outlets that Microsoft is considering caving to pressure and giving ValueAct, which has a $1.9 billion stake, a seat on the board. ValueAct has been pushing for more focus on enterprise and cloud services rather than consumer products such as the Surface.

After reaching all-time highs again on Friday, US stocks futures are slightly higher before the opening bell. Dow (INDEXDJX:.DJI) futures are up 0.16% to 15,506 while futures contracts on the S&P 500 (INDEXSP:.INX) inched up 0.53% to 1,689.50 and Nasdaq (INDEXNASDAQ:.IXIC) futures fell 0.22% to 3,040.75.

On today's economic calendar is June's rate of existing home sales, which is expected to have sped up to a seasonally adjusted annualized rate of 5.27 million from 5.18 million in May. The Chicago Fed's national activity index rose to 0.13 for June from -0.29 in May. Economists expected the index to rise to 0.03.

Overseas, shares were also higher today. Japan's Nikkei (INDEXNIKKEI:.NI225) gained 0.47% after Prime Minister Shinzo Abe's Liberal Democratic Party strengthened its majority in the weekend's parliamentary election with 76 of the 121 contested seats. The LDP has so far supported the radical anti-deflation and fiscal stimulus measures, known as "Abenomics."

European stocks are ahead, but German and British benchmarks are down slightly. Over the weekend, Portuguese President Anibal Cavaco Silva said that he will not call for elections despite the unpopularity of Prime Minister Pedro Passos Choelho's coalition. Two ministers recently resigned due to disagreements over its austerity agenda.

Twitter: @vincent_trivett
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