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Stock Futures Off as Retail Sales Disappoint

NEW YORK ( TheStreet) -- U.S. stock futures were down Monday after a worse than expected retail sales report stoked fresh concerns about a stalling economy.

Futures for the Dow Jones Industrial Average were falling 42 points, or 42.09 points below fair value, at 12,670. Futures for the S&P 500 were down by 4.99 points, or 5.03 points below fair value, at 1347. Futures for the Nasdaq 100 were sliding by 7.25 points, or 9.32 points below fair value, at 2570.

The major U.S. equity averages soared Friday, snapping lengthy losing streaks, as investors cheered in-line China gross domestic product data, a mild read on domestic inflation and a better-than-expected earnings report from JPMorgan Chase (JPM).

The Commerce Department said retail sales slipped 0.5% in June, falling short of the 0.2% increase that economists surveyed by Thomson Reuters were expecting, and after a 0.2% decline the prior month.

The data "marks a meaningful down-shift in household spending momentum, after the buoyancy seen in the past two years," said Millan Mulraine, senior U.S. strategist, TD Securities. "The general tone of this report was disappointing and it suggests that consumers are beginning to retrench spending in a meaningful way."

Mulraine continued: "More importantly, with sales falling for the third consecutive month a trend of softening household spending is beginning to develop, and with confidence remaining weak and employment gains softening we expect personal expenditures to remain quite tepid, underscoring the softening economic outlook."

Excluding the more volatile auto sales component, retail sales fell 0.4%, compared with the flat figure that economists were expecting, and after falling 0.4% the previous month.

In other data, the New York Federal Reserve reported a read of 7.39 for the July Empire State Manufacturing Survey, up from 2.29 previously, and better than the reading of 4 expected by the market.

Still on deck, the Commerce Department is slated to report business inventories for May at 10 a.m. EDT. The expectation is for an increase of 0.2%, versus a rise of 0.4% in April.

In corporate news, Citigroup (C - Get Report) reported second-quarter earnings of $2.95 billion, or 95 cents a share, on revenue of $18.64 billion. The average estimate of analysts polled by Thomson Reuters is for a profit of 89 cents a share on revenue of $18.76 billion.

Excluding one-time items, the bank earned $3.08 billion, or $1 per share, in the latest quarter.

Also, news surfaced over the weekend that Citigroup reportedly plans to seek permission to increase its dividend by the end of this year. The bank currently has a minimal penny per share quarterly payout following the financial crisis.

Citigroup shares closed Friday at $26.65, down nearly 4% year-to-date. The stock was last quoted at $27.47, up 3.11%, on volume of more than 2 million.

Shares of Par Pharmaceutical (PRX) soared early Monday after the company agreed to be acquired by buyout firm TPG for $1.9 billion. The deal values Par shares at $50 each in cash, a premium of more than 35% to Friday's close at $36.58.

Under the terms of the deal, Par, a Woodcliffe, N.J.-based maker of both generic and proprietary drugs, now enters a go-shop period that allows it to solicit a superior proposal from third parties through Aug. 24.

If another offer doesn't materialize, the transaction is expected to close in 2012, subject to customary approvals and closing conditions.

Credit card companies MasterCard (MA) and Visa (V) announced their agreement late Friday to settle class action litigation with U.S. retailers. Visa said it's paying $4.4 billion, while MasterCard said its share of the cash portion of the settlement is $790 million.

Visa expects to record a $4.1 billion charge in the June-ended quarter in relation to the settlement.

The agreement settles claims by retailers that credit card companies conspired to fix the fees they charge retailers and opens the door for retailers to begin charging consumers extra to use credit cards.

Shares of both Visa and MasterCard were moving higher in premarket action.

Chipmaker Texas Instruments (TXN) was downgraded to underperform from market perform at FBR Capital Markets as part of a larger call on the semiconductor makers ahead of second-quarter reporting season.

The firm, which also dropped its 12-month price target to $24.50 from $30, said it sees "more downside risks" for Texas Instruments than other chip stocks "trading near trough valuations."

FBR also lowered price targets and earnings estimates on Atmel (ATML), Linear Technology (LLTC), Maxim Integrated Products (MXIM), Nvidia (NVDA) and ON Semiconductor (ONNN).

Shares of Texas Instruments closed Friday at $27.02, down 8% so far in 2012.

August crude oil futures were shedding 35 cents to $86.75 a barrel. August gold futures were slipping $6.70 to $1,585.30 an ounce.

The benchmark 10-year Treasury was rising 3/32, diluting the yield to 1.483%, while the dollar was up 0.27%, according to the dollar index.

Both the FTSE in London and the DAX in Germany were trading sideways. Hong Kong's Hang Seng Stock index finished up 0.15%. The Japanese markets were closed for a national holiday.

-- Written by Andrea Tse in New York.

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

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