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Stock Futures Decline Ahead of Weekend China Data


NEW YORK ( TheStreet) -- Stock futures were falling Friday as the markets pondered more weak European economic data, more neutral-than-expected stimulus talk from Federal Reserve Chairman Ben Bernanke, and China's rate cut ahead of a data-filled weekend for the country.

A wider-than-expected U.S. trade deficit was also putting a damper on confidence.

Futures for the Dow Jones Industrial Average were lower by 46 points, or 21 points below fair value, at 12,360. Futures for the S&P 500 were down 4.1 points, or 2.2 points below fair value, at 1306, and futures for the Nasdaq were down 4.8 points, or 4.3 points below fair value, at 2526.

U.S. stocks closed on a mixed note Thursday, held in check by Bernanke's non-committal stance on additional stimulus measures-- after the European Central Bank provided no indications of near-term stimulus plans -- and a downgrade of Spain's credit rating by Fitch.

But they had gotten an early lift after the People's Bank of China slashed its benchmark lending and deposit rates by 0.25 percentage points to prevent excessive cooling of economic growth in the country, which now was triggering worries that the move was a sign the market could expect some disappointing data out of the country this weekend, when it releases almost all its heavyweight economic data for May.

"There may be a sizable downside surprise that prompted the PBoC [People's Bank of China] to pull the trigger," said Yao Wei, an economist at Societe Generale. "Second, it is probably also a pre-emptive move ahead of the Greek election and a potential surge in global financial stress afterwards."

Other worries for investors were that German exports fell for the first time in 2012 as demand deteriorated amid a slowdown in global growth and a deepening debt crisis. Exports declined 1.7% in April after spiking 0.8% in March, according to the Federal Statistics Office. Meanwhile, Spain saw its credit ratings downgraded by Fitch to BBB from A, with the move attributed to the burden of recapitalizing the nation's banking system amid a deepening recession.

The Hang Seng Index in Hong Kong finished lower by 0.9% and the Nikkei in Japan fell 2.1%. The FTSE in London was down 0.6% and the DAX in Germany was falling 0.5%.

July crude oil futures were off by $2.21 at $82.61 a barrel. August gold futures were slipping $9 to $1,579 an ounce.

The benchmark 10-year Treasury was gaining 24/32, diluting the yield to 1.561%. The dollar was rising 0.8%, according to the dollar index.

The Commerce Department reported Friday that the U.S. trade deficit shrank to $50.06 billion in April from an unfavorably revised $52.62 billion in March. The figure missed the $49.9 billion figure expected by economists surveyed by Briefing.com.

At 10 a.m. EDT, the Commerce Department is expected to report that inventories at wholesalers rose 0.2% after increasing 0.3% the prior month.

In corporate news, McDonald's (MCD - Get Report), the fast-food giant, reported global same-stores sales rose 3.3% in May, below the Wall Street target for a 4.6% increase.

Molina Healthcare (MOH - Get Report) withdrew its 2012 earnings guidance Wednesday because of potential expansion-related costs in Texas. But the company said it will be able to keep providing managed-care services for Medicaid beneficiaries as of 2013 in Ohio.

Best Buy (BBY) founder and Chairman Richard Schulze resigned from the board on Thursday. Schulze said he was exploring options for his 20.1% stake in the electronics retailer.

Francesca's Holdings (FRAN), the Houston-based specialty apparel retailer, on Thursday reported better-than-expected quarterly results and gave a solid outlook.

The company forecast earnings of 22 cents to 23 cents a share for its fiscal second quarter ending in July on sales of between $69 million and $71 million. Analysts forecast profit of 22 cents a share on sales of $68.6 million.


-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.

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