August 1 Premarket Briefing: 10 Things You Should Know

NEW YORK (TheStreet) -- Here are 10 things you should know for Friday, Aug. 1:

1. -- U.S. stock futures continued their downward slump from Thursday, as investors looked eagerly to the nonfarm jobs report to be released today and to the conclusion of a major earnings week.

European stocks were sinking, depressed by soft manufacturing numbers in the eurozone, stronger sanctions against Russia and fears of a hike in U.S. interest rates.

2. -- The economic calendar in the U.S. on Friday is dominated by the nonfarm payrolls report, which reflects the state of the economy and the GDP. The report appears at 8:30 a.m.

3. -- U.S. stocks on Thursday dropped precipitously as mixed earnings reports, concerns about the health of the European economy and financial sector and the wait for Friday's big nonfarm payrolls report rocked the global markets. The VIX "fear gauge" was spiking more than 27% to 16.98.

The Dow Jones Industrial Average (DIA) closed down 1.88% to 16,563.30. The S&P 500 (SPY) sank 2% to 1,930.67. The Nasdaq (QQQ) sank 2.09% to 4,369.77. The Dow is now in the red for the year.

4. -- The World Trade Organization failed to hammer out a global customs agreement with its 160 member nations late Thursday. The deal would have been the first reform of world trade rules since the WTO's founding 19 years ago. India blocked the agreement, saying it disagreed with the treaty's policy on food stockpiling.

The WTO treaty reform was approved in December's meeting in Bali, Indonesia, but last-minute complaints from India derailed the July 31 ratification deadline. The deal would have added $1 trillion and 21 million jobs to the economy, some said.

The next step in the process is unclear, as some countries have called for ratification of the treaty without India, and others have refused to continue without India's agreement. 

5. -- Iliad (ILIAY), the French budget mobile-phone company, made a $15 billion bid to buy a 56.6% stake in T-Mobile (TMUS). Iliad would likely need $12 billion in debt to finance the move. Investors asked whether Iliad chief Xavier Niel could really find $10 billion in synergies to make the deal worthwhile.

T-Mobile stock was up 2.3% in premarket trading, to $33.69 after a close Thursday at $32.94. The stock is down 2.1% year to date but up 36.3% for the past 52 weeks.

6. -- Markets continued to parse the Argentina debt default news from Thursday. The default is the second for the South American nation in 13 years -- but it was not prompted by insolvency. Instead, a U.S. judge ordered the bond payment to be held in a bank instead of paid, as U.S. hedge-funders sought to recoup the money as payment for defaulted bonds from 2001. The next step may be currency devaluation.

Argentina's stocks dropped more than 8% after the missed debt payment. 

7. -- After a bonanza IPO on June 27, wearable camera-maker GoPro (GPRO) reported earnings that beat analyst revenue targets, but showed a loss of $19.8 million, or 24 cents per share, compared to last year's loss of $5.1 million, or 6 cents per share. But if one-time charges are excluded, the company showed a profit of $11.8 million.

Despite the company's claims of global diversification and growth, investors were not pleased. In premarket trading, GoPro was down 12.3% to $42.07, after a close on Thursday at $47.97. The stock's IPO was at $24 less than six weeks ago. 

8. -- Economists debated what the upcoming nonfarm jobs report would say, generally agreeing that July will show gains for the sixth month in a row. The report will appear at 8:30 a.m.

After this week's better-than-expected GDP report and a stable outlook from the Federal Reserve Open Market Committee, a strong jobs report may help revive the withering stock market. 

9. -- Chrysler sales are up 20% for July, as compared to sales a year ago. Italy's Fiat Chrysler (FIATY) owns the Fiat, Chrysler, Jeep, Ram and Dodge brands. Jeep in particular did well, selling 41% more of its trucks than last July.

Ford (F) and GM (GM) are expected to respond to the numbers later this morning. 

10. -- The dollar is at a 10-month high against foreign currency as markets await the nonfarm jobs report today. The U.S. currency is rising against the dollar and the yen, and stood at $1.3399 to the euro. 

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TheStreet Ratings team rates FORD MOTOR CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate FORD MOTOR CO (F) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, growth in earnings per share and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Automobiles industry average. The net income increased by 6.3% when compared to the same quarter one year prior, going from $1,233.00 million to $1,311.00 million.
  • FORD MOTOR CO has improved earnings per share by 6.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FORD MOTOR CO increased its bottom line by earning $1.75 versus $1.42 in the prior year. For the next year, the market is expecting a contraction of 25.1% in earnings ($1.31 versus $1.75).
  • F, with its decline in revenue, underperformed when compared the industry average of 21.5%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • In its most recent trading session, F has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

Nora Morrison is a researcher, writer and editor on music, popular culture, and business topics. She is an associate editor at TheStreet, and is on Twitter at No Ticker.

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