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Stock Futures Edge Lower Ahead of Earnings Season

NEW YORK (TheStreet) -- U.S. stock futures were dipping Monday following the long July 4 weekend and a record performance that saw the Dow Jones Industrial Average close well over the 17,000 threshold.

Dow futures were down 25 points, or 35.26 points below fair value, to 16,951. S&P 500 futures were falling 3.5 points, or 4.04 points below fair value, to 1,974. Nasdaq futures were slipping 7 points, or 6.26 points below fair value, to 3,908.8. On Thursday, stronger-than-expected jobs data and a falling unemployment rate was enough impetus to drive the Dow to exceed the psychologically important 17,000 milestone.

The next set of catalysts for stocks will be second-quarter earnings season, beginning on Tuesday with Alcoa's (AA) results after the bell and earnings reports from Family Dollar Stores (FDO) on Thursday and dominant U.S. mortgage lender Wells Fargo (WFC) on Friday.

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Piper Jaffray technical analyst Craig Johnson wrote that both the Dow and S&P 500 remain in well-defined uptrends at this juncture and are well above their 50-day and 200-day moving averages. He noted that the markets should continue to work their way higher, with the economy healing and oil prices easing.

According to S&P Capital IQ, the consensus analyst estimate puts S&P 500 earnings growth at 6.6% year over year for the second quarter, with average earnings per share of $28.71. Nine of the 10 sectors are anticipated to have grown, with telecoms and energy leading that growth.

European and Asian markets drifted down on Monday, as traders took a break following last week's rallies and awaited the reopening of the U.S. markets after the July 4 holiday. On the macro front, disappointing German industrial production figures weighed on eurozone markets. Economists had expected output to flatline in May. Instead, production fell 1.8% month-on-month from April.

Stocks poised for action Monday when the market opens include American Apparel (APP), Archer Daniels Midland (ADM - Get Report), Lorillard (LO) and American Express (AXP).

American Apparel is in talks to raise new financing from hedge fund Standard General that would allow the company to pay off a loan that came due after it ousted founder Dov Charney, people familiar with the matter told The Wall Street Journal. Archer Daniels Midland reached a deal to buy Wild Flavors, a flavors and ingredients maker for food, for 2.2 billion euros ($3 billion) in cash. Shares of Lorillard rose 5.3% on Thursday to $64.41 following a CNBC report that the tobacco company and rival Reynolds American (RAI)may be merging by the end of the month. A trial begins Monday in which American Express is set to face off against the U.S. government and 17 states over claims the credit card giant stifles competition from credit card providers that charge lower processing fees.

-- By Andrea Tse in New York

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Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

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