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U.S. stock futures cautious over North Korea in muted holiday trade

Stock MarketsApr 17, 2017 06:57AM ET
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© Reuters. Wall Street futures point to lower open as caution over North Korea reigns – Wall Street futures pointed to a flat to lower open on Monday in holiday-light trade as markets kept an eye on developments in the Korean peninsula and looked ahead to a big week of earnings from Dow components.

The blue-chip Dow futures dropped 16 points, or 0.08%, at 6:54AM ET (10:54GMT), the S&P 500 futures lost 3 points, or 0.11%, while the tech-heavy Nasdaq 100 futures slipped 3 points, or 0.05%.

Investors remained cautious over North Korea’s attempted launch on Sunday of a ballistic missile as U.S. Vice President Mike Pence said Monday that the "era of strategic patience" with North Korea was over.

The U.S. is working with allies and China on responses to the failed test, U.S. President Donald Trump's national security adviser said on Sunday.

With no major economic reports out on Monday, U.S. stocks will still have their first chance to price in weak retail sales and inflation data that was released on the Good Friday holiday.

U.S. retail sales fell for a second straight month in March and consumer prices dropped for the first time in just over a year, underscoring the magnitude of the loss of economic growth momentum in the first quarter.

Specifically, retail sales dropped 0.2% last month compared to expectations for 0.1% decline.

Meanwhile, the consumer price index (CPI) decreased 0.3% from the prior month while annual inflation eased to 2.4%.

The more closely watched core CPI rose 2.0% year-on-year.

The data had already taken a toll on the dollar with the dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, down 0.29% at 100.20 by 6:55AM ET (10:55GMT).

After JPMorgan (NYSE:JPM) launched the unofficial start of the first quarter reporting season last Thursday, investors will be gearing up for a string of earnings releases this week from blue chip companies such as American Express (NYSE:AXP), General Electric (NYSE:GE), Goldman Sachs (NYSE:GS), IBM (NYSE:IBM), Johnson & Johnson (NYSE:JNJ), Verizon (NYSE:VZ) and Visa (NYSE:V).

In a slow start to the week, Netflix (NASDAQ:NFLX) will get the season rolling for the tech sector after the close on Monday.

For the broader market, earnings are forecast to grow 10.1% from a year ago, the best since 2014, while sales growth is expected to jump by 7.5%, the best since 2011, according to Thomson Reuter’s data.

In M&A activity, the NY Post reported that (NASDAQ:AMZN) had expressed “modest internal interest” in the purchase of BJ’s Wholesale Club.

Ant Financial, an affiliate of Alibaba (NYSE:BABA) Group, increased its bid for Moneygram Int (NASDAQ:MGI) to approximately $1.2 billion. The new $18 per share offer beat out a competing $15.20 bid from Euronet Worldwide Inc (NASDAQ:EEFT).

Elsewhere, the Chinese economy grew 1.3% in the first quarter of the year with the annual expansion hitting 6.9%, beating expectations for a 6.8% rise, according to data released Monday.

However, Nordea chief analyst Amy Yuan Zhuang pointed out that the first quarter recover in the world’s second largest economy was led almost exclusively by a housing tailwind that is “hardly sustainable”.

Chinese stocks ended the session down 0.6% while the Nikkei 225 closed practically unchanged. Stock markets in Hong Kong, Australia and Europe were closed for Easter Monday.

Meanwhile, oil traded lower on Monday as U.S. investors returned from a three-day Easter break and took profits after three straight weeks of gains after data showed that U.S. drilling activity continued to increase.

Late Thursday (prior to the Easter holiday period), oilfield services firm Barker Hughes reported its weekly U.S. rig count rose by 11 to 683. That was the thirteenth straight weekly increase to its highest level in nearly two years.

Investors have been concerned that increasing U.S. output would derail major oil producers’ attempts to cut production.
Saudi Arabian energy minister Khalid al-Falih once again insisted on Monday that there was a consensus within OPEC to stabilize the oil market and that producers would do whatever was necessary to achieve that goal.

However, he also said it was too early to discuss whether extending the deal to cut production beyond June was necessary.

U.S. crude futures fell 0.83% to $52.74 by 6:56AM ET (10:56GMT), while Brent oil lost 0.81% to $55.44.

U.S. stock futures cautious over North Korea in muted holiday trade

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