Futures drop on Europe fears, GE results

NEW YORK (Reuters) - Stock index futures pointed to a lower open on Friday as concerns about Europe again entered the forefront as a region of Spain said it would seek the central government's help to repay its debt.

The news added to the cautious tone following results from General Electric Co , which posted revenue that was below expectations because of weakness in Europe, though earnings beat forecasts by a penny per share. The stock fell 1 percent to $19.60 in premarket trading.

"GE's European business was soft, and that's a concern for a lot of companies this earnings season," said Cort Gwon, chief strategist at HudsonView Capital Management in New York. "How will austerity in Europe impact multinationals? GE is a microcosm for the concerns we've been having about the global economy."

Wall Street has risen for the past three days as some strong earnings have taken the focus away from Europe. However, news that Spain's heavily indebted eastern region of Valencia would apply for help under the government's 18 billion euro plan gave investors another reason to take profits.

In addition, Spain said it sees its economy contracting by 0.5 percent in 2013, with unemployment above 23 percent through 2014.

S&P 500 futures fell 9.4 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 65 points and Nasdaq 100 futures sank 9.75 points.

For the week, the Dow is up 1.3 percent, the S&P is up 1.5 percent and the tech-heavy Nasdaq is up 2 percent. The S&P is at its highest level since early May. Some investors are pointing to a trading range between recent highs above 1,400 and a low in June around 1,280.

Earnings have lifted Wall Street in recent days, with technology and bank shares helping to drive the S&P to a 2-1/2 month high. Still, weak economic data, including on manufacturing and employment, served as reminders of the headwinds still facing markets, prompting some investors to lock in recent gains.

Of the 19 percent of S&P 500 companies reporting earnings so far, 65 percent have beaten expectations, slightly better than the yearly average since 1994, according to Thomson Reuters data.

A pair of major tech companies reported late Thursday, and both rallied on the results.

Microsoft Corp reported adjusted earnings and revenue that beat expectations, while Google Inc's revenue surged 21 percent, easing worries a sluggish global economy would take a toll on the company's online advertising.

On a net basis, Microsoft posted its first-ever net quarterly loss as a public company because of a previously announced write-down on the value of an ailing unit. Still, shares rose 1 percent to $31 in premarket trading. Google added 2.6 percent to $608.70.

"We've had a nice run in the beginning of earnings season and people are taking some profits now," Gwon said.

In other earnings news, Schlumberger Ltd climbed 1.4 percent to $69.60 as revenue rose more than expected on international growth. Xerox Corp fell 3.2 percent to $6.96 after cutting its full-year profit forecast.

U.S. stocks rose on Thursday as results and forecasts from IBM , eBay and Qualcomm lifted technology shares. In addition, while weak data limited gains, it added to expectations that the Federal Reserve would soon step up stimulus efforts.

(Editing by Chizu Nomiyama)

WhatsAppFacebookTwitterLinkedinBeloudBluesky